IMF approves nearly $1 billion in funding to boost Kenya’s economy and climate resilience

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The International Monetary Fund (IMF) announced on Monday its executive board’s approval of a funding package approximating $1 billion for Kenya. The IMF’s move aims to alleviate the existing financial strain on East Africa’s leading economy, according to an official IMF statement.

Following the successful completion of the fifth reviews under Kenya’s Extended Fund Facility (EFF) and Extended Credit Facility (ECF), the IMF executive board authorised an immediate disbursement of approximately $415.4 million. This move is supplemented by the extension of the EFF and ECF durations from 38 to 48 months, affording Kenya additional time to carry out requisite economic reforms.

Moreover, the IMF also consented to a new 20-month agreement under the Resilience and Sustainability initiative. Worth around $551.4 million, this arrangement aims to bolster Kenya’s efforts towards climate resilience.

Despite grappling with the most severe drought in several decades and a complex external environment, the IMF noted that Kenya has demonstrated commendable progress in the implementation of economic reforms.

Antoinette Sayeh, the Deputy Managing Director of the IMF, declared that the executive board’s latest decisions will empower the Kenyan authorities to persist in tackling these challenges. It will also aid in sustaining market confidence, promoting growth, and furthering ongoing reforms.

Sayeh emphasised the crucial importance of the approval of Kenya’s fiscal budget for 2023-2024 and the 2023 Finance Act. These are instrumental steps in supporting ongoing consolidation endeavours and reducing debt vulnerabilities, whilst simultaneously protecting social and development expenditures.

With tightening financing conditions, Sayeh underscored the necessity for a “prudent debt policy” and the ongoing prioritisation of concessional loans.

This latest IMF decision is not only an endorsement of Kenya’s fiscal policies and reforms but also a signal of international support for the nation’s fight against climate change and its effects.

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