The International Monetary Fund (IMF) has approved disbursement of $606.1 million to Kenya to support the government's efforts in rebuilding fiscal buffers and resilience to climate shocks.
The IMF executive board’s decision allows the disbursement of special drawing rights SDR365.28 million ($485.8 million) under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements, and SDR90.47 million ($120.3 million) under the Resilience and Sustainability Facility (RSF).
Gita Gopinath, First Deputy Managing Director of the IMF and acting chair, noted that Kenya's economy remained resilient, with growth above the regional average, inflation decelerating, and external inflows supporting the shilling and a build-up of external buffers, despite a difficult socioeconomic environment.
“The EFF/ECF and the RSF arrangements continue to support the authorities’ efforts to anchor macroeconomic stability, reduce debt vulnerabilities, promote reforms, and mitigate climate-related risks,” the IMF boss said in a statement on Wednesday.
IMF, however, said Kenyan authorities face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations due to significant revenue shortfall in the 2023/2024 fiscal year and the withdrawal of the Finance Bill, 2024.
“Delivering on this would call for improving governance and transparency to restore public trust in the effective use of public resources," the Fund said.
The EFF/ECF arrangements aim to support Kenya’s efforts to address debt vulnerabilities while safeguarding resources for priority social and developmental needs, build resilience to shocks, improve governance and transparency; and support broader economic reforms to realise the country’s medium-term potential.
The RSF arrangement is meant to reinforce Kenya’s efforts to address climate-related challenges and catalyse private climate finance.
IMF's EFF/ECF programme with Kenya was approved in April 2021 while the RSF facility was approved in July 2023.
Under the EFF/ECF, total IMF financial commitment stands at SDR2.714 billion ($3.61 billion), of which SDR2.343 billion ($3.12 billion) has been approved for disbursement.
For the RSF arrangement, the corresponding amounts are SDR407.1 million ($541.3 million) and SDR135.70 million ($180.4 million), respectively.
