The International Monetary Fund on Friday said its board had approved new three-year financing arrangements for Kenya valued at $2.34 billion to help the African country continue responding to the COVID-19 pandemic and address its debt vulnerabilities.

Approval of the new loans under the Fund’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF) will enable immediate disbursement of about $307.5 million that Kenya can use for budget support, adding to $739 million it received in emergency COVID-19 aid in May 2020, the fund said in a statement.

The IMF said Kenya’s debt remained sustainable, but it was at high risk of debt distress, and authorities should focus their near-term agenda on urgent structural policy challenges.

For nearly two years, Kenya has abandoned expensive commercial debt to cut back on ballooning repayments, while revenue collection has been squeezed by the pandemic.

It also faces huge budget deficits that have been deepened by the coronavirus crisis.

“The program supported by EFF/ECF arrangements with the Fund provides a strong signal of support and confidence,” IMF Deputy Managing Director Antoinette Sayeh said in a statement. “The Kenyan authorities have demonstrated strong commitment to fiscal reforms during this unprecedented global shock, and Kenya’s medium-term prospects remain positive.”

Kenya was hit hard at the onset by the COVID-19 pandemic, but its economy has been picking up after likely posting a slight contraction of 0.1 percent in 2020, the IMF said.

WI Guest Author

This correspondent is a guest contributor to The Washington Informer.

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