Kenya’s request for a 150 billion shillings standby credit from the International Monetary Fund will be determined later this month.
A mission from the fund that has been in the country for the last two weeks is expected to present its report to the IMF’s Executive Board for discussion and final decision.
The mission says it is satisfied with Kenya’s progress in meeting conditions set by the IMF for the restoration of the emergency fund.
The precautionary fund is meant to cushion Kenya from external forex disruptions. The country has a dollar reserve fund of 8.5 billion dollars which is enough to sustain import for a period of 5 months.
Due to the effects of the coronavirus pandemic, Kenya is staring at a major forex shortfall as supply chains are disrupted and diaspora remittances dip.
For five weeks now a mission from the International Monetary Fund led by Benedict Clements has been in the country holding talks with President Uhuru Kenyatta, treasury and central bank officials.
The mission says discussions focused on the policies needed to support the authorities’ ambitious reform agenda, which aims to further bolster Kenya’s strong and inclusive growth.
The mission raised concern with rising fiscal deficit which rose slightly in FY2018/19 to 7.7 percent of GDP while nominal public debt reached 62.1 percent of GDP.
Treasury target a reduction of the budget deficit to 6.3 per cent of GDP in FY2019/20, with revenue boosted by dividend transfers from state-owned enterprises and expenditure curtailed by a reduction in inefficient spending.
The 150 billion shillings credit line is part of a 230 billion shillings funding that Kenya is sourcing from lenders to support budget and help to fund emergency measures instituted to deal with the Corona virus pandemic in the country.