(Nairobi) – Kenya has gained access to approximately $606 million following the approval of the seventh and eighth reviews of its Extended Fund Facility (EFF), Extended Credit Facility (ECF), and Resilience and Sustainability Facility (RSF) by the International Monetary Fund (IMF) Executive Board. The approval is part of ongoing efforts to support Kenya’s economic recovery, rebuild fiscal buffers, and enhance resilience to climate-related shocks.
The IMF acknowledged Kenya’s progress in addressing external financing challenges earlier this year, which helped stabilize the shilling and accelerate the accumulation of foreign reserves. However, the IMF raised concerns over large revenue shortfalls and resistance to tax measures, which continue to pose significant challenges to the country’s fiscal health. Despite progress, the IMF emphasized the need for a credible fiscal consolidation strategy to reduce debt vulnerabilities.
Gita Gopinath, IMF’s Acting Chair, noted that the EFF/ECF and RSF arrangements are designed to support Kenya’s efforts to stabilize the macroeconomy, reduce debt risks, and promote necessary reforms. However, she stressed that Kenya’s fiscal performance has fallen short of expectations, adding pressure to the country’s growing debt concerns.
The IMF Board also pointed out that missed revenue targets could undermine Kenya’s debt stability, highlighting the urgent need for tax system reforms. These reforms, according to the IMF, should aim at improving tax efficiency and ensuring equity. The Board further emphasized the importance of swift governance reforms, particularly in anti-corruption frameworks and anti-money laundering and counter-terrorist financing (AML/CFT) measures. These changes are critical to rebuilding public trust and attracting climate financing.
Kenya’s Central Bank received praise for its actions to bolster monetary policy and enhance exchange rate flexibility, which helped shield the country from external shocks. Despite these efforts, the IMF urged the Kenyan government to implement reforms swiftly to maintain economic stability.
In terms of economic growth, the IMF forecasts a slowdown in Kenya’s GDP growth, from 5.6% in 2023 to 5.0% in 2024 and 2025. The IMF attributed this slowdown to disruptions in global commodity production and shipping, conflicts, civil unrest, and extreme weather events, all of which have impacted the economic outlook for sub-Saharan Africa.
The Kenyan government’s efforts to manage debt and promote fiscal stability are closely tied to international partnerships, such as those with the IMF. The disbursement of $606 million will play a critical role in supporting these efforts, but the IMF stresses that continued reforms are necessary to ensure long-term economic health.
Table: IMF Support for Kenya (2024)
| Facility | Amount | Purpose |
|---|---|---|
| Extended Fund Facility (EFF) | Part of $606 million | Strengthening fiscal buffers and debt management |
| Extended Credit Facility (ECF) | Part of $606 million | Supporting fiscal reforms and economic stability |
| Resilience and Sustainability Facility (RSF) | Part of $606 million | Enhancing resilience to climate shoc |