The International Monetary Fund (IMF) has reached a staff agreement to advance a Sh28 billion loan to Kenya as part of the $2.3 billion Special Drawing Right (SDR) approved in April last year.
The focus of the review was on the progress made by President Uhuru Kenyatta-led government on reforms and policy initiatives; the pact is the result of the program’s third review, which took place between March 31 and April 22.
Kenya is on track to reach its fiscal goals, according to the lender, and has made progress on its governance and anti-corruption strategy.
The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks.
Upon completion of the review, Kenya would have access to $244 million, bringing the total IMF financial support under these arrangements to about $1.17 billion (Sh134.5 billion).
The amount is aimed at cushioning the country from adverse economic implications brought about by Covid-19 pandemic.
The lender says Kenya is on track with its fiscal correctness, especially on debt management.
The country has gradually cut on expensive external commercial debt in the 2022/23 budget and is set to cut the debt limit to 55 per cent of GDP.
The country’s debt currently sits at Sh8.2 trillion or 69.8 per cent of GDP.
The funds, according to the IMF, have provided resilience, allowing people and companies to mitigate some of the impact of strong increases in global oil and fertilizer costs.
It also praised Kenya for making progress in restructuring state-owned firms, such as Kenya Airways and Kenya Power, which are currently undergoing restructuring to reduce costs to the Exchequer.
As part of measures to alleviate cash-flow limitations following global lockdowns precipitated by the Covid-19 epidemic, KQ will get a Sh36.6 billion bailout starting in July.
The airline has been ordered by the government to reduce its network and rationalize its flight frequency.
