Kenya’s $1.5 Billion Stand-By Arrangement with the IMF has come to an end, the country’s finance minister Henry Rotich has announced.
“The program has ended. We will continue engaging the fund going forward” Kenya’s Finance Minister Henry Rotich was quoted by Reuters while addressing reporters in Nairobi.
This comes at a time when experts warned that this would pose some serious challenges for the economy.
Kenya's $1.5 Standby Credit Facility with IMF Comes to an END;
Shilling weakens to 101.130 vs USD
Nairobi All Share Index Drops by -1.84% pic.twitter.com/NRpv7MkJ9L
— Kenyanwallstreet (@kenyanwalstreet) September 13, 2018
According to Bloomberg, the country’s PS for Finance Ministry Kamau Thugge said that not having the IMF facility would not hurt the country from a macro economic standpoint.
Under its SBA programme, the IMF offers a precautionary credit line that can be tapped incase of external shocks on the economy but a country has to adhere to pre-agreed policy conditions and fiscal discipline. On Kenya’s case, Uhuru Kenyatta’s administration was to scrap the interest rate cap in addition to other measures which included reducing the country’s fiscal deficit as well as implementation of the 16% VAT on fuel.
On Kenya’s case, IMF in March extended the facility by six months to 14 September 2018.
IMF Conditions politically unacceptable
However, the country’s parliament voted to reject IMF’s strings which included scrapping of rate cap & implementation of 16% VAT on fuel.