The International Monetary Fund (IMF) is pushing for controlled spending and the restructuring of loss-making state-owned companies to protect Kenyan government revenues and reduce persistent budget deficits.
The fund plans to release $244 million ” in the coming weeks” to fund the country’s budget, said tight spending controls and a medium-term revenue strategy under development will help anchor deficit reduction in the coming years.
It also underscored the importance of maintaining the momentum of reforms to address difficulties facing financially troubled state-owned enterprises (SOEs), including Kenya Airways (KQ) and Kenya Power.
“At KQ, already established by Had a government benefited to guarantee a large part of its liabilities, steady progress in ongoing restructuring efforts will be important to sustain the fare s to the treasury,” said the IMF mission, led by Mary Goodman.
The IMF expressed satisfaction with Kenya’s progress in economic reforms and the financing agreement is now awaiting management and board approval Board of Directors of the Fund.
Kenya will gain access to US$244 million, bringing total IMF support to US$1.17 billion in a 38-month financing facility under the Enhanced Fund Facility (EFF) and Extended Credit Facility (ECF).
In April 2021, the IMF Board approved a three-year US$2.34 billion financing package for Kenya to support the government’s response to Covid-19, improve governance and reduce debt vulnerabilities while preserving resources to protect vulnerable groups.
Between March 31 and April 22, IMF staff tasked Kenya with discussing Reform progress and authorities’ policy priorities under the third review of Kenya’s EFF-supported ECF economic program.
In a statement on April 25, Ms Goodman said the Kenyan economy had enjoyed a robust recovery as the impact of the Pandemic subside.
“Spillovers from the war in Ukraine are expected to have a modest impact on growth in the near term given Kenya’s relatively limited direct involvement in Russia and Ukraine,” she said.
Kenya has been hit hard by the Covid-19 pandemic, with the economy shrinking from 5.4 percent in 2019 to 0.1 percent in 2020. The IMF forecasts a recovery to 5.7 percent in 2022.