The Executive Board of the IMF has approved Ksh78 billion ($739 million) drawn under the Rapid Credit Facility (RCF) to help meet Kenya’s urgent balance of payments needs.
A statement on the IMF website says that the COVID-19 pandemic is hurting the Kenyan economy, significantly reducing growth, creating fiscal and external financing needs. The funds come in time when Kenya’s foreign exchange reserves have been dwindling due to low international trade and export inflows. It will allow Kenya to maintain an adequate level of international reserves and help provide the budget financing needed to respond to the pandemic.
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“The COVID-19 pandemic has delivered a large economic shock to Kenya. The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs. Emergency financing under the RCF will deliver liquidity support to help Kenya cover its balance of payments gap this year.”Tao Zhang, Deputy Managing Director and Acting IMF Board Chair
The Kenyan government remains committed to fiscal consolidation plans once the crisis abates to reduce debt vulnerabilities. The IMF is ready to provide policy advice and further support the Kenyan authorities, as needed.