International Monetary Fund (IMF) has approved Sh255 billion loan to Kenya.
Sh33.5 billion will be disbursed next week to support Covid-19 pandemic response efforts.
In a statement, the Washington-based lender said its executive board had approved the 38-month program under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
“The three-year financing package will support the next phase of the authorities’ COVID-19 response and their plan to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups,” IMF said.
Speaking on Tuesday, Central Bank of Kenya (CBK) governor Patrick Njoroge said Kenya was hopeful the loan facilities would be approved by Friday and disbursed early next week.
“We expect this will be approved on Friday and the consequential disbursement will follow early next week,” Njoroge said.
He added, “The bottom line is that the program will support our COVID-19 response and budget support. It anchors fiscal consolidation through revenue driven policies which minimize debt vulnerabilities. This is the key element of the program.”
A staff level agreement with the IMF was reached on February 15 on the disbursement of a Sh263.4 billion ($2.4 billion) loan over a period of three years.
The facility was meant to stabilize Kenya’s debts and boost the economy post-Covid-19 pandemic.
“The program will support the next phase of the country’s COVID-19 response and the authorities’ plans for a strong multi-year effort to stabilize and begin reducing debt levels relative to GDP, laying the ground for durable and inclusive growth over the years to come,” said Mary Goodman, an IMF staffer.
A majority of Kenyans are disapproving of the Jubilee government’s insatiable appetite for foreign loans.
According to the 2021 Budget Policy Statement, Kenya’s public debt as of June 2020 stood at Sh7. 06 trillion, equivalent to 65 per cent of GDP.