IMF Completes Review of its 3-year Lending Programme to Kenya

The International Monetary Fund (IMF) has completed its second review of Kenya’s 38-months lending programme.

This follows approval by the IMF Board in April this year of a US$2.34 billion finance package to Kenya. The three-year financing package is aimed at supporting the next phase of Kenya’s COVID-19 response and its plan to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.

Stiff conditionalities set by Kenya under supervision of the IMF is made up of a broader reform and governance agenda, including addressing weaknesses in some state-owned enterprises (SOEs) and strengthening transparency and accountability through an elaborate anti-corruption framework.

IMF Executive Board to make an announcement in December 2021

A statement from Kenya’s National Treasury and Planning Ministry said an announcement from the IMF Executive Board on the outcome of this virtual review, which took place between October 12th, 2021 and November 3rd, 2021, is expected in December this year.

The IMF mission focused on Quarterly Performance Criteria, Indicative Targets, the Monetary Policy Consultation Clause and Structural Benchmarks for State-Owned Enterprises that Kenya had set for itself.

National Treasury said Kenya had achieved all targets relating to debt and debt guarantees as well as CBK’S net international reserves.

Tax revenue collection and priority social spending by the national government and change in the stock of exchequer requests outstanding for 90 days or more were also met by the June test date.

The monetary policy consultation clause for the end of June was also met with inflation within the target range.

“Under this 3 year programme, we set ourselves structural benchmarks through which we seek to transform the fiscal governance in state-owned enterprises, improve transparency and reinvigorate anti-corruption measures and strengthen public accountability in procurement,” said Ukur Yatani, Cabinet Secretary- Ministry of National Treasury and Planning.

He said Kenya has successfully completed the financial evaluation of Kenya Airways, which was outstanding from the first review.

The CBK has also published the White Paper on Modernization of its Monetary Policy Framework while the Government has issued a directive to Ministries, Departments and Agencies as well as Counties to have a common payroll system that is linked to the Integrated Financial Management System(IFMIS).

Kenya is also implementing a structural benchmark relating to the provision of comprehensive information on the public procurement portal, including beneficial owners of firms that are awarded public tenders.

Kenya has also published a tax expenditure and budgetary impact report, fiscal risk analysis reports on contingent liabilities stemming from high-risk state-0wned enterprises and a report covering Public-Private Partnerships(PPPs). The country has also increased its level II tax audits of firms by 30%.

“The Government will continue on its fiscal consolidation plan by containing growth in expeditures and maintaining a reasonable revenue raising effort so as to reduce debt-related vulnerabilities. We will also ring-fence priority social spending and supporting those so affected by the ongoing drought,” said CS Yatani.