- In December last year, the country received $433 million (Sh52.8 billion) from the lender.
- The country to receive $410 million Sh56.2 billion once the board approves
The International Monetary Fund (IMF) has reached a staff-level agreement to disburse $410 million (Sh56.2 billion) to Kenya as part of a $2.34 billion loan approved in April 2021.
This is part of the fifth review of Kenya’s economic programme under the EFF and ECF arrangements.
In December last year, the country received $433 million (Sh52.8 billion) from the lender.
"The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks," IMF's team led by Haimanot Teferra said in a statement.
This would bring total IMF financial support disbursed under the EFF and ECF arrangements to$2.2 billion (Sh301 billion).
The lender has also extended the duration of the loan programme by 10 months to April 2025 to allow sufficient time for meeting set objectives.
The country is lagging in the implementation of several conditions issued by the lender before approving the facility two years ago.
They include reforming Kenya Airways and Kenya Power, privatisation of loss-making state agencies and raising Value Added Tax on petroleum products to 16 per cent from the current eight per cent.
"It will also be important to make inroads on the agenda to reform state-owned enterprises and stop the drain on budget resources stemming from, among others, Kenya Airways and Kenya Power and Lighting Company,'' IMF said.
The lender said that the Kenyan economy has been strained by a challenging environment, with the Real GDP growth remaining at 4.8 per cent in 2022 despite a contraction in agriculture as the country experienced the worst drought in decades.
It has projected the economy to grow 5.3 per cent in 2023.
The government budget has been under pressure from shortfalls in revenue collection and challenging financing conditions.
Inflation declined to 7.9 per cent in April but remains above the target range. Even so, it says that the functioning of the foreign exchange is gradually improving.
Monetary policy has also been tightened, with the central bank policy rate having been increased by 250 basis points over the past year.
“However, significant challenges remain against the backdrop of slow global economic growth and tight financial conditions,'' the lender said.