The International Monetary Fund has approved an immediate disbursement of about US$235.6 million, usable for budget support which brings Kenya’s total disbursements for budget support to about US$1,208.2 million.
With this approval, Kenya would have received $1.21 billion from the IMF, out of a total of around $2.34 billion available under a 38-month term approved in April 2021.
“Despite the resilient economic recovery, the program remains subject to downside risks, including from deeper disruptions from the war in Ukraine, unsettled global market conditions, and an increase of food insecurity,” the IMF said.
“Continued steadfast commitment to prudent policies and advancing structural reforms remains essential to maintain macroeconomic stability and safeguard Kenya’s positive medium-term prospects,” it said.
The Fund also stated that Kenya had met all the performance targets for the period through December, but requested waivers due to “the timing of the review” as final data to evaluate the end-June 2022 quantitative criteria was not yet available.
According to the Fund, Kenya is at high risk of debt distress and reducing vulnerabilities is a central goal of the IMF program. The country also plans to replace the current 10 trillion-shilling ($84.4 billion) debt ceiling with an anchor based on gross domestic product.
The lender estimates economic growth in Kenya will slow to 5.7% this year, after expanding 7.5% in 2021, the fastest pace in more than a decade. With Russia’s war in Ukraine and Kenya’s worst drought in 40 years, inflation is projected to increase to an average rate of 7.3%.