Kenya Secures KES.78 Billion IMF Loan to Tackle Fiscal Challenges

The International Monetary Fund (IMF) executive board has approved a Kes.78 billion loan for Kenya to support the country’s fiscal recovery efforts. This decision follows the IMF’s recent conclusion of its seventh and eighth reviews for Kenya, which faced delays in June due to widespread anti-government protests.

The IMF expressed confidence that this financial support will help Kenya address its economic recovery needs effectively.

Of the approved amount, Kes.62.5 billion will come through the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs, while an additional Kes.15.4 billion will be provided under the Resilience and Sustainability Facility (RSF).

Currently, the IMF supports Kenya through these three distinct programs. The EFF and ECF target countries facing inflation challenges due to structural issues, providing financial aid to stabilize policies over time. The EFF typically spans four years for economic restructuring, while the ECF can extend up to five years for greater flexibility.

In contrast, the RSF focuses on helping nations advance their climate agendas by funding sustainable initiatives.

In approving the loan, the IMF board noted Kenya’s fiscal struggles, including a tax revenue shortfall in the 2023/24 fiscal year and the withdrawal of the Finance Bill 2024 amid Gen Z protests earlier in the year.

However, the IMF projected that the EFF/ECF program would still support Kenya in strengthening its economic standing.

“Kenya’s economy remains resilient, with growth above the regional average, inflation decelerating, and external inflows bolstering the shilling and external buffers, despite a challenging socio-economic environment,” remarked IMF Deputy Managing Director Gita Gopinath.

She further added, “The EFF/ECF and RSF arrangements support the authorities’ commitment to achieving macroeconomic stability, reducing debt vulnerabilities, implementing reforms, and mitigating climate-related risks.”