Kenya to Receive Ksh.28 Billion-Loan from IMF for Post-Covid Recovery

The International Monetary Fund (IMF) is expected to give Kenya a further 28 billion shillings to cushion the country from the economic crisis brought about by the covid 19 pandemic.

This comes after IMF, and Kenyan authorities reached an agreement on economic reviews marking the third review of a 38-month loan program valued at 270.7 billion shillings.

The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks.

Kenya will have access to $244 million upon the review, bringing the total IMF financial support under these arrangements to about $1.17 billion (134.5 billion shillings).

The lender noted that it would be necessary for the country to maintain the momentum of reforms to tackle difficulties at financially-troubled state-owned enterprises (SOEs)—including Kenya Airways (KQ) and the Kenya Power and Lighting Company (KPLC).

‘’At KQ, which had already benefitted from a government guarantee on a large portion of its debt liabilities, steady progress on the ongoing restructuring effort will be important to minimize costs to the Exchequer. At KPLC, crystallizing an action plan to restore KPLC’s medium-term profitability and fully cover any financing gaps through end-2023 will likewise be critical to minimize calls on the budget,’’ reads part of the statement by IMF.

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In December last year, IMF wired 29.9 billion shillings to Kenya to bring total disbursements under the three-year loan program to 112.5 billion shillings ($972.6 million) at the end of 2021. The fresh allocation will bring total proceeds for Kenya under the program to 138.9 billion shillings ($1.2 billion).

According to the 2021 budget policy Statement, Kenya’s public debt will rise to 8.6 trillion shillings by June 2022.

Kenya’s current debt stands at 8.2 shillings trillion shillings, equivalent to 69.8 percent of GDP.

Kenya’s debt has been rising fast, sending chills down the spines of policymakers who feel the country would soon be unable to pay the debts. The Senate was forced to place the debt ceiling at 9 trillion shillings last year to control Kenya’s roaring appetite for borrowing.

On Thursday last week, Catholic Bishops called on to IMF to help African nations deal with debt burdens.

In a statement titled: “Financing Crisis Recovery with Hope for the most Vulnerable in Africa,” a consortium of African Catholic bishops said the continent is facing extreme hunger and debt crisis which needs urgent attention.

They said that Africa is home to two-thirds of the world’s extremely poor, and the pandemic pushed 40 million more Africans into extreme poverty, lacking access to essential goods and services like health, education, food, and water.

The bishops proposed some elements that could help African nations control debts, including responsible lending and borrowing rules and policies. They also proposed debt contract disclosure and authorization frameworks to prevent a future debt crisis.