The International Monetary Fund (IMF) will release $433 million (Sh52.7 billion) next month to help boost the country’s foreign exchange following a meeting between President William Ruto and the lender’s staff.

Funds will be released after an approval by the IMF executive board in New York but the staff level report is full of praise of the new administration after slashing subsidies and having allowed prices to float.

The IMF said it was happy with the government’s pledge to cut its spending and implement reforms having removed fuel and electricity subsidies.

“The new government has expressed strong commitment to the IMF-supported program,” said the IMF in a statement posted on their website.

38-month funding review

The New York based bank also said they have reached staff-level agreement with Kenyan authorities on economic policies to conclude the fourth review of the 38-month funding arrangements.

“Kenya would have access to about $433 million in financing once the review is formally completed by the IMF Executive Board,” said the IMF.

This even as strong headwinds abound in Kenya due to volatile international commodity prices, tighter external financing conditions, higher inflation and global slowdown in growth. These alongside continued drought have created a challenging backdrop for economic policy making.

IMF said its programme is helping the country through these global shocks by anchoring policies to support inclusive growth while addressing debt vulnerabilities.

“The authorities are taking forceful measures to further reduce the fiscal deficit. Fuel subsidies were mostly eliminated in September and the variable cost adjustments in electricity prices were reinstated,” IMF said.

Calls for transparency

The multilateral lender called on the government to make public key beneficiaries of government tenders to foster transparency.

“Looking forward, it will also be important to move ahead with structural and governance reforms. This includes completing efforts underway to publish beneficial ownership information for awarded government contracts, which will be a major step towards greater transparency and accountability.”

The lender said reform of financially-troubled state-owned enterprises such as Kenya Airways and Kenya Power and Lighting Company will also be key.

“The staff team is grateful to the authorities for the candid and constructive discussions, and for their proactive approach to ensuring success of the IMF-supported economic program.,” the IMF representatives said.

The team met with President William Ruto, CS for the National Treasury Prof. Njuguna Ndung’u, Governor of the CBK Dr. Patrick Njoroge, the Principal Secretary for the National Treasury, Dr. Julius Muia; Deputy Governor of the CBK, Ms. Sheila M’Mbijjewe, members of the economic council, and other senior government and CBK officials.

Kenya’s stock of dollars at the central bank has dropped to just the required 4 months of import cover meaning the reserves could fall under the statutory requirement if the cash is delayed.

Kenya has been priced out of the Eurobond markets making it hard for the country to access foreign exchange that it needs to buy oil, food, medicine and other key imports.