IMF Approves Ksh.78 Billion Loan for Kenya to Strengthen Fiscal Policies.
In a significant boost for Kenya’s economy, the International Monetary Fund (IMF) approved a Ksh.78 billion loan to support the country’s financial stability and resilience efforts. This approval marks a pivotal moment for Kenya as it seeks to overcome recent fiscal challenges. The IMF board, meeting to discuss Kenya’s seventh and eighth program reviews, evaluated the country’s performance under the Extended Fund Facility (EFF), Extended Credit Facility (ECF), and Resilience and Sustainability Facility (RSF). The loan promises to strengthen Kenya’s financial footing while supporting climate-focused initiatives.
The IMF provides Kenya with support through three primary programs: the Extended Fund Facility (EFF), the Extended Credit Facility (ECF), and the Resilience and Sustainability Facility (RSF). Both the EFF and ECF aim to assist countries struggling with structural economic issues, helping them control inflation and stabilize their economies. Kenya will access Ksh.62.5 billion from the EFF/ECF, funds critical for economic restructuring. The EFF offers a four-year timeline, while the ECF extends to five years, allowing flexibility based on each country’s needs. The RSF portion, totaling Ksh.15.4 billion, supports Kenya’s climate agenda, helping it tackle climate-related risks more effectively.
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The IMF highlighted several fiscal challenges that Kenya faces, including a tax revenue shortfall during the 2023/24 fiscal year. Widespread protests, especially among younger populations, contributed to the government’s withdrawal of the Finance Bill 2024. Despite these setbacks, IMF projects that the EFF/ECF program will continue to boost Kenya’s economic stability and foster stronger fiscal policies. IMF Deputy Managing Director Gita Gopinath expressed the IMF’s commitment to supporting Kenya in building resilience to economic pressures and advancing climate action. According to Gopinath, Kenya’s economy shows resilience, with growth levels surpassing regional averages, inflation slowing, and external inflows bolstering the Kenyan shilling.
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The IMF has partnered with Kenya since April 2021 when then-President Uhuru Kenyatta, alongside his Deputy (now President) William Ruto, entered a four-year agreement. As the current program ends in April 2025, President Ruto’s administration may seek an extension, signaling Kenya’s dedication to comprehensive economic reform. The IMF’s ongoing support through EFF/ECF and RSF frameworks helps anchor macroeconomic stability, lower debt risks, and promote climate-responsive reforms, which are vital for Kenya’s long-term growth.
IMF’s Ksh.78 billion loan approval offers Kenya a strategic financial lifeline to reinforce economic stability, reduce debt vulnerabilities, and pursue its climate goals. With continued support from the IMF, Kenya can address its current fiscal hurdles while building a resilient and sustainable economy for the future.
IMF Approves Ksh.78 Billion Loan for Kenya to Strengthen Fiscal Policies.
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