Kenya could receive $976 million (Sh126 billion) from the International Monetary Fund (IMF) in two disbursements by the end of the year, the Central Bank of Kenya (CBK) has revealed.
CBK Governor Kamau Thugge said this follows successful discussions with IMF to combine the delayed seventh and eighth review for its support programme.
“We have been having discussions with the IMF, and the discussions are really to combine the seventh and eighth review. We have made a lot of significant progress and we are in the final stages of an agreement,” he said during a media briefing on Wednesday.
Early June, Kenya and the IMF reached a staff-level agreement on the seventh review of its $3.6 billion (Sh464.5 billion) support programme under an IMF plan that expires next year.
However, the review is yet to be approved by the Fund’s executive board after the government withdrew $2.7 billion (Sh348.4 billion) in tax increases and draw up spending cuts after the mass protests, therefore holding up the disbursement.
Unlocking the disbursement
As part of a push to unlock the disbursement, the government has also called on the IMF to conduct an official review of the country’s corruption and governance issues.
According to experts, countries themselves must request the IMF’s so-called governance diagnostic to investigate corruption and governance issues.
In response to this, the Kenyan government and IMF have established a new fiscal framework capping the fiscal deficit at over 4.3 per cent of the gross domestic product (GDP), unlocking the funding freeze and allowing the disbursements to build the country’s official reserves.
“The fiscal framework with the fiscal deficit at 4.3 per cent of GDP has been agreed between the Treasury and the IMF and so we have in our projections of $1.9 billion (Sh245.4 billion) accumulations in the reserve,” Thugge said.
He further said that the CBK has assumed a disbursement from the IMF before the end of December, adding that the discussions are progressing well and they are expecting that disbursement will be made before the end of the calendar year.
Concurrently, the CBK also revealed that discussions between the Treasury and the United Arab Emirates (UAE) have been made in the acquiring of a Sh194.4 billion loan from the UAE.
In an attempt to seek financing after the mass protests that saw the IMF holding up its disbursement, the government asked for help from the UAE. “On the issue of the UAE, at the moment I think we are finalising the discussions between the IMF, and there is little scope for additional commercial financing,” Thugge said.
However, he added that these are discussions that the Treasury will continue to have with other external creditors to see how they can not only finance the budget deficits but also reduce the treasury recourse to domestic borrowings.
On Monday, Prime Cabinet Secretary Musalia Mudavadi, also the cabinet secretary for Foreign and Diaspora Affairs, said that the IMF will make a corruption and governance diagnosis to ensure the government can curb the never-ending corruption that continues to hurt Kenyans’ economy and livelihoods.
“We need to take the fight on corruption a notch higher and cast away the spirit of corruption. The war on corruption has taken a long time. We must ask ourselves where corruption is domiciled so that we can tackle it head-on,” Mudavadi said in Nairobi.
The move came after President William Ruto faced pressure from young protesters demanding accountability and pledged in July to propose changes to the relevant law to seal the loopholes that undermine the fight against corruption.
