Kenya is set to receive KSh262.68 billion (US$2.4 billion) from the International Monetary Fund (IMF) to support the country’s second phase of COVID-19 response.
IMF said Tuesday, February 15 that it has reached an agreement with Kenya on a 38-month programme, with disbursement set to start in the coming weeks.
An IMF staff team led by Mary Goodman has been conducting virtual missions in the country in December, 2020 and in February, 2021 to undertake negotiations over the programme.
“I am pleased to announce that the Kenyan authorities and the IMF mission team have reached agreement on economic and structural policies that would underpin a 38-month program under the EFF and ECF arrangements for about US$2.4 billion.
“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 Ms. Goodman.
Kenya’s economy contracted within Central Bank’s target band, reaching 5.7 percent in January, 2021.
This, however, is the deepest inflation the country has seen in nearly two decades, taking a hit from the economic fallout from the COVID-19 pandemic.
This is the second IMF loan Kenya will be receiving since the start of COVID-19 pandemic.
In May, 2020, Kenya received KSh79.3 billion from the international lender, to help address the impact of COVID-19 pandemic too.
Currently, Kenya’s debt ceiling is set to cross the set KSh9 trillion mark as the National Treasury faces challenges in preparing the 2021/22 budget amid revenue constraints.
There is a likelihood that National Treasury is seeking a new limit in the region of KSh12 trillion as per the proposed amendments to the Public Finance Management (National Government) Regulation.