Economy

Kenya still good for soft loans, IMF official says

Kenya will still qualify for soft loans and other funding from the World Bank, even though the size of the economy has been revised upwards.

According to Mr Rogelio Armando Morales of the International Monetary Fund's African Department in Washington, the economy may be 20 per cent larger than before but it is still vulnerable to large shocks, making a low-interest loan programme vital.

Some economists awaiting the announcement of rebased Gross Domestic Product figures had expressed fears the country may lose access to cheap financing. Ms Razia Khan, Standard Chartered’s regional research head for Africa, said the change may see Kenya miss out on highly concessional, long-term interest-free loans and grants from the International Development Association, the World Bank’s fund for poor countries.

“If Kenya’s low-income status is revised, such (interest free and low-interest) financing may not be available to it, despite the country’s very real development needs,” she said.

The government is today (Tuesday) expected to release revised figures for GDP that will likely see the country achieve lower middle-income status. This is defined by the World Bank as having GDP per capita of between $1,045 and $4,125. Kenya’s output of goods and services per person is expected to rise to $1,229 (KShs109,545) using the new national statistics.

Kenya received the final instalment of a three-year, $750 million (KShs66 billion) concessional loan from the IMF, the World Bank’s lending arm, in December. The government plans to borrow more, at a higher rate, and will be hosting an IMF delegation in October to discuss the new facility.