Economy

IMF, Kenya agree on Sh63bn-plus precautionary loan deal

Kenya and the International Monetary Fund agreed on a stand-by loan deal to support the country's economic reforms and give it a cushion against outside shocks, the IMF said on Thursday.

The fund added that Kenya plans to treat the loan, which would total $700 million to $750 million (Sh63 billion to Sh67.5 billion), as precautionary.

The deal must still be approved by the IMF's board, which should meet on the issue in late January.

READ: Kenya still good for soft loans, IMF official says.

East Africa's biggest economy had first asked for such a facility at the beginning of 2014 to protect it against unforeseen shocks, such as weather-related problems for the farming industry.

"This arrangement would serve an insurance purpose, providing Kenya with access to IMF resources in the event of exogenous shocks," the IMF said in a statement.

READ: IMF team jets in for review of economy.

The fund said the stand-by loan could help Kenya pursue initiatives such as a multibillion-dollar standard gauge railway, while keeping its debt sustainable.

The railway should help boost Kenya's economic growth to 6.9 per cent next year, compared to 5.3 per cent in 2014.