To help Kenya in its response to the Covid-19 pandemic and its growing debt, the International Monetary Fund (IMF) has entered into an agreement with the Kenyan government to lend it a three-year, Sh263 billion ($2.4 billion) financial package.
According to Mary Goodman, an advisor in the strategy, policy and review department at the IMF, the two had come to an agreement that will help the Kenyan Government to enhance economic growth in the future.
“I am pleased to announce that the Kenyan authorities and the IMF mission team have reached agreement on economic and structural policies that would underpin a 38-month program under the EFF and ECF arrangements for about $2.4b. The staff-level agreement is subject to IMF management approval and Executive Board consideration, which is expected in the coming weeks. 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,” she said.
Prior to the agreement the IMF through its staff conducted virtual missions to Kenya from December 9 to 17 2020 and from February 4 to 15 2021 to negotiate the three-year IMF program.
Due to the pandemic, Kenya has been negatively affected as things take their time to get back to normal. The Government tried to put up measures to help minimize the negative impact in 2020 such as the reduction of taxes. However, some of these measures such as the temporary corporate and personal income tax cut were all reversed this year.
The IMF program aims to reduce debt vulnerabilities by raising tax revenue and reducing government spending and thereby safeguard resources to protect the vulnerable groups in Kenya. In addition, the program aims to address weaknesses in some state-owned enterprises and strengthen transparency and accountability in government agencies through an anti-corruption framework. The program would also strengthen the monetary policy framework and support financial
stability.
