The International Monetary Fund (IMF) has approved immediate disbursement of US$684.7 million to the Kenyan government.
- The Board’s decision allows for the immediate disbursement of SDR 469.25 million (about US$624.5 million) under the EFF/ECF arrangements – which includes an augmentation of access of SDR 233.40 million (about US$310.6 million).
- It brings total disbursements under the EFF/ECF arrangements to SDR 1,978.23 million (about US$2.6 billion).
- The decision also allows for an immediate disbursement of SDR 45.23 million (about US$60.2 million) under the RSF arrangement.
“Kenya’s performance under the ECF/EFF arrangements have been mixed with adherence to quantitative targets being broadly satisfactory,” Ms. Antoinette Sayeh, Deputy Managing Direction and Acting Chair said, “The authorities have made welcome progress in some key areas, including governance and public financial management. Continued implementation of corrective measures to address missed targets and accelerated reforms will be important.”
IMF Executive Directors noted the resilience of the Kenyan economy despite the ongoing fiscal and external adjustments in a challenging environment. The directors emphasized the importance of further front‑loaded fiscal consolidation efforts to mitigate debt vulnerabilities and to achieve Kenya’s new debt anchor by 2029. They stressed the need for continued fiscal prudence, supported by domestic revenue mobilization and expenditure rationalization. Strengthening social safety nets and improving efficiency of investment are also crucial.
On tax collections, Directors expressed concerns over recent shortfalls and called for urgent implementation of corrective measures, including timely adoption of measures in the Medium‑Term Revenue Strategy. They also reiterated the need for managing fiscal risks proactively including from pending bills and contingent liabilities.
- The near-term outlook is one of continued resilience with growth projected at around 5 percent in 2024 amid ongoing adjustments in the fiscal policy and external accounts.
- Inflation is expected to rise in the first half of 2024, driven primarily by global oil price volatility and exchange rate fluctuations.
- But it will remain contained due to the recent monetary policy tightening and as the government strives to stabilize the overall public debt/GDP in 2024.
Kenya’s economy expanded by 5.6 percent y/y in the first nine months of 2023, driven by a strong recovery in agriculture which also helped lower both overall and food inflation. Non-agricultural growth, however, slowed amid tighter policies.