The International Monetary Fund (IMF) has reached an agreement with Kenya that could provide vital financial assistance of over $1 billion. The agreement comes as Kenya faces mounting pressure on its finances due to escalating debt repayments and the severe impact of the worst drought in four decades.
Under the agreement, IMF staff and Kenyan officials have decided to extend the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements for an additional 10 months, until April 2025. This extension aims to provide more time for Kenya to fulfill the requirements set by the IMF. Additionally, the amount of money available to Kenya under these facilities will be increased by approximately $544 million.
Kenya will also gain access to around $544 million through the Resilience and Sustainability Facility (RSF). This facility has been specifically designed to enhance Kenya’s climate change resilience and adaptation capabilities. The cumulative funding committed to Kenya under these three facilities now amounts to approximately $3.5 billion.
The staff-level agreement between the IMF and Kenya is expected to be reviewed and approved by the IMF’s executive board in July. If approved, Kenya will immediately gain access to $410 million from the EFF and ECF augmentations. This would bring the total financial support disbursed under these arrangements to $2.017 Billion Including the EFF/ECF augmentations and the RSF support, the total IMF commitment to Kenya under these arrangements would reach $3.52 billion.
Ms. Haimanot Teferra of the IMF, at the conclusion of the mission, issued a statement outlining the key points of the agreement.
She noted that addressing issues related to state-owned enterprises, including Kenya Airways and Kenya Power and Lighting Company, is also essential to prevent budgetary drain. “Although the reforms in these areas may take time to yield results, they will support the favorable medium-term outlook for the Kenyan economy.”
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