Nairobi — The government has reached a staff-level agreement with the International Monetary Fund (IMF), which intends to pave the way for the disbursement of $976 million (Sh126.05 billion).
According to the IMF, the agreement will be part of a comprehensive policy package needed to complete the seventh review of Kenya's economic program under the Anti-Money Laundering and Countering the Financing of Terrorism EFF/ECF arrangements.
"If approved by the IMF's Executive Board, the total remaining access will be adjusted to 135.55 percent of quota (SDR735.77 million, about US$976 million) which will also include a proposed recalibration of 21.67 percent of quota in access (SDR117.6 million, about US$156 million) toward the zero-interest concessional resources under the ECF arrangement," revealed Haimanot Teferra, the IMF country's representative.
The deal will also include a second review of the Resilience and Sustainability Facility (RSF) arrangement, which provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including risks related to pandemic preparedness and climate change.
The policy package seeks to preserve debt sustainability and price stability to help Kenya manage its fiscal risks as well as address financial sector vulnerabilities to support inclusive and resilient economic growth.
The IMF stated that the approval of the second review of the Resilience and Sustainability Facility will give the government access to an immediate disbursement of $120 million, approved on July 17, 2023.
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"The IMF team and the Kenyan authorities have reached a staff-level agreement on a comprehensive policy package needed to complete the seventh review of Kenya's economic program under the EFF/ECF arrangements and the second review of the RSF arrangement, "added Teferra, the IMF country's representative.
The fund commended Kenya's economic growth, which recovered last year, with the nation's GDP growing by 5.6 percent on the backbone of a strong recovery in the agriculture sector following the return of rains after the severe droughts witnessed in previous years.
However, following the destruction of infrastructure caused by the recent floods and core inflation, the country has experienced strained resources, highlighting the urgent need for comprehensive financial resources.
Additionally, a shortfall in tax revenue collection and deterioration in the primary fiscal balance in FY2023/24 relative to IMF program targets have pushed the government to consider fiscal consolidation by introducing several tax measures in the proposed 2024 Finance Bill.
The bill seeks to generate more revenue following pressure on the nation's public debt, which has now hit Sh. 11.1 trillion.
