FUNDING

IMF reaches agreement with Kenya in $264m disbursement

This will bring total financial support to $984 million for 2021.

In Summary

•The review of Kenya’s Extended Fund Facility and Extended Credit Facility programs found that authorities remained committed to economic reform program, the IMF said.

•Kenya had outperformed on its fiscal targets for the 2020/21 fiscal year, and tax revenue has been recovering so far in fiscal 2021/22.

IMF headquarters
IMF headquarters

IMF has reached reached a staff-level agreement with Kenya on a second review of its loan arrangements that would release about $264 million (Sh29.5 billion) to the East African country.

This will be subjected to executive board approval in coming weeks.

If approved, the disbursement would bring total IMF financial support for Kenya to $984 million (Sh109.8 billion) for 2021.

“Kenya’s economic rebound continues and the Covid-19 vaccination program has ramped up,” IMF Kenya mission chief Mary Goodman said in a statement, adding that the pandemic dealt a setback to Kenya’s sustainable development goals.

“New challenges include drought in the northern regions of the country and emerging security needs. Energy prices are rising in tandem with world oil prices which, along with higher food prices, has pushed up overall inflation even as core inflation has remained stable,” Goodman said.

The review of Kenya’s Extended Fund Facility and Extended Credit Facility programs found that Kenyan authorities had remained committed to their economic reform program, the IMF said.

Kenya had outperformed on its fiscal targets for the 2020/21 fiscal year, and tax revenue has been recovering so far in fiscal 2021/22.

On Friday, Kenya Revenue Authority said it collected Sh154.38 billion during the month of October, against a target of Sh142.285 billion.

KRA Commissioner General Githii Mburu said the authority recorded an impressive performance of 108.5 per cent, and growth of 23.3 per cent, sustaining positive performance into quarter two of the financial year 2021-22.

Mburu said the authority commenced the new financial year on an upward trajectory after surpassing its July-September target of Sh461.65 billion by Sh15 billion, recording a 30 per cent growth.

The commissioner said that during the month under review, customs and border control exhibited excellent performance after collecting Sh57.37 billion against a set target of Sh51 billion.

Domestic taxes recorded a performance rate of 106.5 per cent with a collection of Sh96.62 billion against a target of Sh90.7 billion.

PAYE registered a collection of Sh37 billion against a target of Sh36.46 billion.

He said the sustained strong performance is a reflection of the improving global economic environment as well as the implementation of revenue enhancement initiative by the authority.

The Gross Domestic Product is expected to grow by 5.3 per cent in financial year 2021/22 as per the 2021 Budget Policy Statement.

Goodman said:“The IMF team shared the authorities’ assessment that some space is needed in FY21/22 for emergency spending to face the drought in the north of the country and meet emerging security needs.” .