African countries are following in Kenya’s footsteps by seeking the precautionary facility offered by the International Monetary Fund (IMF).
This is after Nairobi became the first country in sub-Saharan Africa to qualify for the standby facility — that means IMF commits to provide the funds only in the event of unexpected shocks.
Deputy managing director of the IMF Min Zhu said Kenya had shown the way and stimulated interest of other countries in the facility.
“The deputy managing director observed that Kenya is the first sub-Saharan country to qualify for a precautionary blend of a stand-by arrangement and a standby credit facility... Many countries have shown interest in the facility following the IMF’s board approval of this facility for Kenya,” said a statement released by the National Treasury.
Kenya qualified for a total of Sh64 billion ($688.3 million) to mitigate the impact of potential shocks as the country carries out various reforms. It does not intend to draw the cash unless external shocks lead to an actual balance-of-payments need.
Treasury secretary Henry Rotich in the meanwhile said the World Bank had approved the eligibility of Kenya to access financial resources under the non-concessionary International Bank for Reconstruction and Development (IBRD) window.
“Kenya becomes one of the few countries in sub-Saharan Africa to qualify for this facility,” said Mr Rotich. It is now waiting for the terms under which it can access the facility.
Mr Rotich released the statement after attending the IMF/World Bank spring meetings in Washington. The meetings were intended to review global economic performance and emerging challenges especially the declining oil prices on the world economy.
He held meetings with Mr Zhu and vice-president of the World Bank-Africa region Makhtar Diop. The Cabinet secretary updated the two on Kenya’s economy, noting that it had remained resilient and was expected to grow by 6 to 7 per cent this year.
In view of the security situation having negatively impacted the tourism sector, the Treasury secretary said there would be an increase in the amount of resources allocated to the security sector.
“As a result of this security challenge, the government has embarked on a programme of modernising the security sector,” said Mr Rotich.
According to the Budget Policy Statement for the 2015/16 financial year, national security will have a ceiling of Sh114 billion, up from Sh90.7 billion in 2014/15 fiscal year, a growth of 25.8 per cent.
This also represents an increase to 8.2 per cent share of total expenditure from 7.7 per cent share in the financial year set to end in June.