The International Monetary Fund (IMF), as the Bretton Woods lender, is beginning its mission to Kenya this week, and Kenya seeks new concessional financing from the institution.
According to Kristalina Georgieva, managing director of the fund, Kenya is interested in using the facility for resilience and sustainability, which is intended to offer long-term funding to improve economic resilience and lessen balance of payments difficulties.
“We have a very strong programme with Kenya that we are financing now. We intend to expand by deploying a new long-term concessional financing instrument. We have created the Resilience and Sustainability Trust, and there will be a team here on May 7th to work on that”, Kristalina said.
The maximum amount that a nation may receive from the Resilience and Sustainability Facility is capped at 150 per cent of its quota or one billion SDRs.
Hence, if Kenya were to obtain finance under this window, it would be qualified to receive up to $1.1 billion, or around Sh150.1 billion at the current exchange rate, in fresh funding from the IMF.
The payback timeframe for payments made from the IMF’s Resilience and Sustainability Fund is normally 20 years, with a grace period of 10.5 years before principal repayment begins. A country must have an ongoing IMF-supported programme, such as Kenya’s ongoing 38-month, $2.41 billion programme under the Extended Credit Facility and Extended Fund Facility agreements, in order to be eligible for funding under the Resilience and Sustainability Facility.
The IMF Managing Director claims that during her visit last week, she met with President William Ruto and members of the Cabinet and discussed the country’s difficulty accessing the international financial markets due to the current tightening circumstances.
“The meeting with the president and cabinet members was focused on how Kenya can overcome the exogenous shocks it is experiencing. We know that as a result of Covid-19 and the war in Ukraine, inflation shot up, interest rates jumped, and countries like Kenya found themselves like innocent bystanders hit by those shocks. For Kenya, what it has meant is no access to international markets for now and therefore pressure to withstand this funding squeeze”, Georgieva said.
The ongoing IMF mission in Kenya is also scheduled to perform the fifth review of the existing 38-month, $2.41 billion programme.
Haimanot Teferra, who recently succeeded Mary Goodman as the mission chief for Kenya, will lead this mission. In accordance with the continuing programme, which was launched in April 2021, Kenya has so far accessed $1.66 billion.