The wait appears to be over for Kenya as the Executive Board of the International Monetary Fund – IMF has approved the funding request of East Africa’s largest economy. The 38-month arrangement will be carried out under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya in an amount equivalent to SDR 1.655 billion (305 percent of quota or about $2.34 billion or KSh 225 billion.
This would be used to support the next phase of the authorities’ COVID-19 response and address the urgent need to reduce debt vulnerabilities. Its approval under the ECF/EFF will enable the immediate disbursement of about $307.5 million or KSh 33.5 billion, usable for budget support. This follows fund emergency support to Kenya in May 2020 of $739 million at the time of approval.
Kenya experienced severe economic contraction at the onset of the COVID-19 pandemic. With a forceful policy response, the economy has picked up heading into 2021 and could post a slight contraction of 0.1 percent in 2020. Even with this recovery, challenges remain in the return to durable and inclusive growth, and past gains in poverty reduction have been reversed.
The bank explained that the program would set a basis for a resurgence of growth and shared prosperity. It will also advance the structural reform and governance agenda, by addressing weaknesses in some state-owned enterprises (SOEs) and strengthening transparency and accountability through the anticorruption framework.
