Kenya to receive Ksh.34.5 billion IMF loan next week: CBK

Kenya is expected to receive Ksh.34.5 billion from the International Monetary Fund (IMF) next week.

The loan represents the first batch of a $2.4 billion 38-month program with the Bretton Woods institution which presently underpinned in a staff level agreement reached in February.

The IMF Executive Board is expected to meet this Friday to approve the program and subsequent disbursement ahead of its annual spring meetings commencing on Monday.

“We expect this will be approved on Friday and the consequential disbursement will follow early next week,” CBK Governor Patrick Njoroge said in a post Monetary Policy Committee (MPC) news conference on Tuesday.

Kenyan fiscal and monetary authorities reached a staff level agreement with the IMF on February 15 on the disbursement of a Ksh.263.4 billion ($2.4 billion) loan over three years.

The program was tipped to stabilize Kenya’s debt levels and lay ground works for a post-COVID-19 economic recovery.

“The program will support the next phase of the country’s COVID-19 response and the authorities’ plans for a strong multi-year effort to stabilize and begin reducing debt levels relative to GDP, laying the ground for durable and inclusive growth over the years to come,” said Mary Goodman, an IMF staffer who lead the mission to Kenya last month.

The CBK expects the program to serve as the building blocks for desired fiscal consolidation amidst elevated concerns on widening budget deficits and increased borrowing.

“The bottom line is that the program will support our COVID-19 response and budget support. It anchors fiscal consolidation through revenue driven policies which minimize debt vulnerabilities. This is the key element of the program,” added Dr. Njoroge.

Moreover, the new flows along with further disbursements from the World Bank’s Development Policy Operations (DPO) are expected to strengthen the reserve bank’s usable foreign currency deposits which are largely denominated in dollars.

IMF’s first disbursement will nevertheless be only half of the expected in flows from the program by the National Treasury.

According to the final 2021 Budget Policy Statement (BPS), Treasury expected IMF flows amounting to Ksh.78.8 billion by June this year and a further Ksh.54 billion in the financial year commencing in July.

Flows from the World Bank’s DPO are meanwhile estimated at Ksh.82.5 billion by June and a further Ksh.74.3 billion in the next fiscal year.