The International Monetary Fund (IMF) executive board has approved the release of an additional $407 million budgetary support for Kenya to support the country’s budget which seeks to help the country recover from the effects of Covid-19.
IMF said they were satisfied with the government’s commitment to socio-economic and structural reforms.
“The Kenyan authorities have shown strong commitment to their reform agenda in challenging circumstances and are acting to reduce debt vulnerabilities while maintaining support for the economic recovery. The IMF is working with the authorities to support the next phase of Kenya’s COVID-19 response, address the urgent need to consolidate fiscal balances and improve governance,” IMF said in a statement on Wednesday, June 23, 2021.
This brings Kenya’s total disbursements for budget support under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) programme to about $714.5 million.
In April this year, IMF Board approved a $2.34 billion three-year financing package for Kenya to support the government’s next phase of the Covid-19 response, enhance governance and reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.
IMF said they are happy that Kenya hasdecided to accelerate their COVID-19 vaccination program. “Achieving the ambitious targets will depend on the availability of vaccines worldwide, and the IMF program is designed to support expanding vaccinations,” IMF said in a statement.
“Second, the draft FY21/22 budget carries forward the fiscal consolidation effort that is required to reduce debt vulnerabilities. It also secures space for needed social and development spending and maintains support to key economic sectors affected by the pandemic. Third, as part of their strategy to address the financial difficulties of state-owned enterprises (SOEs), the authorities have undertaken financial evaluations of 18 SOEs with the largest fiscal risks and one more is being finalized. This will provide a solid basis to identify least-cost approaches to address financial challenges at these SOEs and improve their oversight and management,” IMF said.
Kenya was hit hard at the onset by the Covid-19 pandemic, with the economy contracting to 0.1 percent in 2020 from 5.4 percent in 2019.
According to the IMF, Kenya’s debt remains sustainable but it is at high risk of debt distress.