The International Monetary Fund (IMF) has given the green light to a $941 million lending boost to Kenya, providing immediate relief to the East African nation grappling with financial pressures. The disbursement, granted under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs, will be complemented by an additional release of $60.2 million through the Resilience and Sustainability Facility (RSF) arrangement.
The IMF’s executive board approval increases its total funding commitment to Kenya across these three facilities to over $4.4 billion. Despite facing uncertainties over accessing financial markets before a $2 billion Eurobond matures in June, Kenya’s resilience in the face of domestic and external challenges has earned praise from the IMF.
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“The EFF/ECF and RSF arrangements continue to support the authorities’ efforts to sustain macroeconomic stability,” stated the IMF in a Wednesday release. Kenya aims to utilize these funds, alongside anticipated support from the World Bank and regional banks like the African Export-Import Bank and Trade & Development Bank, to meet looming foreign debt maturities without depleting its hard currency reserves.
The country’s financial and balance of payments positions have been under strain due to the lasting impacts of the COVID-19 pandemic and recurrent climate change-induced droughts. Additionally, the depreciation of Kenya’s shilling currency has contributed to the economic challenges. The infusion of IMF funds is expected to provide a crucial lifeline in navigating these complex economic landscapes.
