Kenya Pursues New Financing as IMF Initiates Special Mission to Strengthen Economy

by | May 9, 2023 | News | 0 comments

Kenya is actively seeking additional concessional financing from the International Monetary Fund (IMF) as the organization launches a specialized mission in the country this week. The East African nation is aiming to access the IMF’s Resilience and Sustainability Facility, which offers long-term funding to strengthen economic resilience and address balance of payments challenges.

IMF Managing Director Kristalina Georgieva announced that the organization has a robust ongoing financial program with Kenya and plans to extend it through the Resilience and Sustainability Trust. A team will arrive in Kenya on May 7th to facilitate this process.

Countries’ access to the Resilience and Sustainability Facility is limited to 150% of their quota or one billion Special Drawing Rights, whichever is lower. In Kenya’s case, this means they could potentially receive up to $1.1 billion, approximately 150.1 billion shillings, in new funding.

Financing from the IMF’s Resilience and Sustainability Facility usually includes a 20-year repayment period and a 10.5-year grace period during which no principal is repaid. To qualify, a country must have a simultaneous IMF-supported program, such as Kenya’s current 38-month, $2.41 billion Extended Credit Facility and Extended Fund Facility arrangements.

Georgieva reported that her recent meeting with President William Ruto and cabinet members centered on Kenya’s challenges in accessing global financial markets due to tightening conditions. The country has been hit by exogenous shocks caused by the Covid-19 pandemic and the war in Ukraine, resulting in soaring inflation, rising interest rates, and restricted access to international markets.

The current IMF mission in Kenya will also conduct the fifth review of the ongoing 38-month, $2.41 billion program. This development coincides with Haimanot Teferra’s appointment as the new IMF Mission Chief to Kenya, succeeding Mary Goodman. Since the program’s inception in April 2021, Kenya has received $1.66 billion in funding.

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