The International Monetary Fund (IMF) Executive Board has completed the fifth reviews for Kenya allowing for an immediate disbursement equivalent to about US$415.4 million.
The Board on Monday completed the fifth reviews under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements for Kenya. The Board has also approved an extension of the EFF/ECF arrangements from the current 38 months to 48 months (through April 1, 2025) to allow sufficient time to implement the authorities’ reform agenda and realize the program’s key objective and an augmentation of access amounting to 75 percent of quota (SDR407.1 million) over the extended program duration for balance of payments support.
The Board’s decision allows for an immediate disbursement of about US$415.4 million, bringing total disbursements under the arrangements so far to about US$2.04 billion. In completing the review, the Executive Board also approved modification of program conditionalities, waivers of nonobservance of the continuous performance criteria on accumulation of external arrears and end-June 2023 tax revenue target in light of corrective measures taken by the authorities and waiver of applicability for all other end-June 2023 and continuous quantitative performance criteria.
The Executive Board also approved Kenya’s request for an arrangement under the Resilience and Sustainability Facility (RSF) of about US$551.4 million to support ambitious efforts to build resilience to climate change. The RSF duration will coincide with the period remaining under the EFF/ECF arrangements, as extended.
The EFF/ECF arrangements approved on April 2, 2021 aim to support Kenya’s program to address debt vulnerabilities, the authorities’ response to the COVID-19 pandemic and global shocks, and to enhance governance and broader economic reforms while safeguarding resources to protect vulnerable groups and address developmental needs.
IMF noted that the Kenyan authorities have made good progress in implementing their economic reform program despite facing the worst drought in decades and a challenging external environment.
The RSF-supported program is expected to further integrate climate-related considerations in macro policies and frameworks by adopting green public financial management and climate-sensitive public investment management reforms, introduce carbon pricing, enhance effectiveness of Kenya’s existing frameworks to mobilize climate finance, and strengthening disaster risk reduction and management.
Board Assessment
“Kenya’s economy has been resilient despite the worst drought in many decades and a difficult external environment. The ECF and EFF arrangements continue to support the authorities’ efforts to address emerging challenges to sustain macroeconomic stability and market confidence, promote growth, and advance ongoing reforms,” said Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair
“The reforms under the RSF program are expected to advance Kenya’s already strong track-record at addressing climate-related challenges. These reforms will advance efforts to incorporate climate risks into fiscal planning and the investment framework, reduce emissions through carbon pricing, enhance Kenya’s existing frameworks to mobilize climate finance; and strengthen disaster risk reduction and management.”
IMF Approves $1 Billion Financing Facility to Support Kenya’s Economy
