The approval has taken longer than expected as the lender reviews recent happenings in the country including the rejection of the Finance Bill 2024 and the Court of Appeal’s ruling that the Finance Act, 2023 was unconstitutional.
The Supreme Court has since put on hold the appellate court's ruling on the Finance Act 2023 pending the hearing of the government's appeal.
It is almost three months since the IMF team and the Kenyan authorities reached a staff-level agreement on a comprehensive policy package needed to complete the seventh review of the $3.9 billion (Sh503 billion) facility.
Although details of the meeting, which happened on the sidelines of the ongoing high-level Forum on China-Africa Cooperation Summit (FOCAC) in Beijing, China, are scanty, a source privy to the meeting told the Star that Kenya appealed to Selassie to intervene.
"The President and his team talked in length with the director for Africa at IMF on recent happenings in the country. It is part of the country's effort to appeal to the Fund to approve the much-anticipated instalment following the 7th review,'' a highly placed source at the National Treasury told the Star.
On Wednesday, Bloomberg reported that the IMF was still committed to supporting the Kenyan authorities in addressing the economic challenges it faces, with an announcement expected mid-September.
The IMF’s executive board was expected to approve the release of the funds under the seventh review of Kenya's medium-term funding programme in July.
However, the escalating political crisis following the Finance Bill's rejection and subsequent protests delayed that crucial decision.
In June, IMF's Haimanot Teferra said the policy package seeks to preserve debt sustainability and price stability, manage fiscal risks, and address financial sector vulnerabilities while continuing to advance structural reforms to support inclusive and resilient growth.
Even so, Kenya is banking on the funds to meet 2024/5 budgetary needs, with President William Ruto's government staring at a deficit of close to Sh1 trillion.
The meeting in China follows another one between the National Treasury CS John Mbadi and IMF representatives, led by Selim Cakir last month in Nairobi where it was agreed that the nullification of the Finance Act, 2023 could deepen Kenya's fiscal woes.
The exchequer has valued the impact of the rejection and nullification of the financing programmes for two consecutive years at Sh560 billion with Sh346 billion attached to the rejection of Finance Bill, 2023.
Delays in the disbursement of IMF's facility have seen the National Treasury threaten another round of budget cuts, after the supplementary budget slashed the 2024/5 budget by two percent early last month.
This saw review saw a Sh145 billion cut from the budget to Sh3.87 trillion, consisting of Sh40 billion for the recurrent expenditure and Sh105 billion for development.
''We have no choice but to increase borrowing and adjust our fiscal targets. The fiscal deficit, initially projected at 3.3 per cent of GDP, has now been revised to 4.2 per cent, adding further pressure on Kenya's public debt,'' Treasury PS Chris Kiptoo told journalist at a past presser.
