The International Monetary Fund (IMF) has indicated its plans to present Kenya’s request for funding, to its board in early 2021. This follows an agreement made in many areas including the postponement of Kenya’s fiscal consolidation plan
The Fund disclosed this week that it is continuing to work with Kenyan authorities on a possible financing program and hopes to present a possible plan to its board in early 2021.
IMF spokesman Gerry Rice told a regular online briefing that an IMF mission had reached agreement on many areas late last year.
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Fiscal adjustment
The Fund is recommending a pause in fiscal adjustment by Kenya to accommodate increased health spending and support for the economy during the current external shock, as well as the continued support of a monetary response, he said.
Anxiety on when Kenya and the IMF will conclude its discussions comes at a time when the Kenya Shilling continues to lose ground against the US dollar as forex reserves at the Central Bank of Kenya (CBK) dwindle.
Renewed lockdown in parts of Europe since the last quarter of 2021 continue to affect Kenya’s exports to Europe and Asia.
Kenya Shilling
The Kenya Shilling also continues to take a hit, reversing its early gains in December 2020.
Households, motorists, and industrial fuel users are also bracing for more challenging times as prices of fuel at the pump increase in January 2021.
Rising fuel prices
Latest figures from the Energy and Petroleum Regulatory Authority (EPRA) show that Free On Board (FOB) price of murban crude oil rose in December 2020 to$ 49.57 per barrel, increasing 15.17% from $ 43.04 per barrel in the month prior.
The pinch at the fuel pump is also attributed to a weakening Kenya Shilling which depreciated by 0.14% from KSh 110.36 against the greenback in November 2020 to KSh 110.52 against the US$ in December 2020.
What Kenya is seeking for IMF
Kenya is seeking a loan of as much as $2.3 billion from the International Monetary Fund under the lender’s extended fund facility.
A possible 3 1/2-year loan program is what is under discussion between Kenya and the IMF.
Kenya targeting an initial disbursement of about $725 million in the fiscal year that runs through June, National Treasury Cabinet Secretary Ukur Yatani said in a recent interview with Bloomberg.
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