The International Monetary Fund (IMF) executive board is set to decide on fresh funding for Kenya when it meets on October 30, a newly released calendar shows, raising hope for the East African nation hard-hit by the long-delayed disbursement of cash from the multilateral lender.
Kenya anticipates receiving Sh113 billion in the next tranche of loans from the IMF, following a breakthrough in protracted discussions that delayed funding from the Bretton Woods institution after new tax measures contained in the Finance Bill, 2024, were rejected in June.
The IMF is set to complete the seventh and eighth reviews under the extended credit facility and the extended fund facility (ECF/EFF) alongside the second review of the resilience and sustainability facility (RSF).
The IMF had reached a staff-level agreement on the completion of the seventh review but was yet to conduct an eighth review, suggesting the Kenyan mission at the fund could undertake a new visit to the country before the October 30, meeting.
The IMF has not wired any funding to Kenya under the programmes since January when it sent Nairobi Sh88.3 billion ($684.7 million) after the sixth review of the ECF/EFF arrangements and the first review of the RSF.
Estimates from the National Treasury project Sh64.4 billion in disbursements covering the seventh review of Kenya’s programme with the IMF and a further Sh48.5 billion covering the eighth review of the multi-year facilities.
The Central Bank of Kenya (CBK) earlier indicated that the IMF would combine the two disbursements, following delays to the release of monies covering the seventh review in September.
The rejection of IMF-backed revenue-raising measures represented by the Finance Bill, 2024 saw the multilateral fund delay new funding to Kenya, as the defeat on new taxes upset the programme’s benchmark conditionalities including estimates on revenue.
The combination of the seventh and eighth reviews is expected to put the programme back on track, speeding up funding to Kenya ahead of the arrangement’s April 2025 closure date.
The IMF had been expected to complete the seventh review of its multi-year programme with Kenya at the end of July and initiate an eighth review of the funding framework in October. The National Treasury said last week that it reached a consensus with the IMF on discussions, that followed the withdrawal of the Finance Bill, 2024.
Treasury Cabinet Secretary John Mbadi who is currently in the US for the IMF autumn annual meetings said Kenya and the fund had struck common ground allowing for fresh disbursements.
“We are basically done with the issues they raised, one of which we had control over which is the decision of the Supreme Court on the Finance Act, 2023. There were also issues around the Finance Bill, 2024 and we told them the bill is defeated and we can’t bring it back and I think they are aligned to that,” he said.
The final review of the multi-year programme reached in April 2021 is expected to release Sh33 billion at the end of the arrangement next year.
It remains unclear whether Kenya will seek an extension of the programme even as the exchequer terms the IMF as a key source of cheap funding to the country.
