The International Monetary Fund (IMF) will disburse Sh44 billion ($410 million) to Kenya in the coming weeks to boost the public purse amid the Covid-19 pandemic.
The fund is part of the $2.4 billion (Sh256.3 billion) three-year financing programme that was agreed to in February.
The multilateral lender said on Tuesday that it is satisfied with the ongoing reforms Kenya committed to implementing as part of its tough funding conditions.
The IMF conducted its first review of the financing programme led by Ms Mary Goodman through a virtual mission from April 29 to May 14, 2021.
“The IMF staff team and the Kenyan authorities have reached a staff-level agreement on the first review of Kenya’s economic programme under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF),” said Ms Goodman.
“The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks. Upon completion of the Executive Board review, Kenya would have access to SDR 285 million (equivalent to about US$410 million),” she said.
The remaining loan is will be disbursed every six months after consecutive IMF reviews.
Kenya received the first tranche of $314 million (Sh34.45 billion) in April after IMF approval of the financing deal.
Among the raft painful reforms Kenya is to implement include removal of tax reliefs and exemptions on some consumer goods, restructuring of loss-making parastatals as well as dealing with its rising debt obligations.
"The structural reform agenda during the first phase of the programme will address urgent policy needs. In the near term, key priorities will be addressing challenges in SOEs (State Owned Enterprises) and governance," an IMF document explaining the loan reads.
The parastatals lined up for changes include Kenya Airways, Kenya Airports Authority (KAA), Kenya Railways Corporation (KRC) and Kenya Power.
Others are Kenya Electricity Generating Company #ticker:KEGN, Kenya Ports Authority and the three largest public universities – Nairobi, Kenyatta and Moi.
IMF said decisive policy actions to contain the Covid-19 outbreak has helped cushion the blow to the economy and maintained the momentum necessary to advance economic reform agenda.
The lender now projects the economy to expand by 6.3 per cent in 2021, down from an earlier projection of 7.6 per cent.
“The coronavirus shock has unfortunately also reversed some of the poverty reduction gains Kenya achieved in recent years and debt remains elevated.”
The IMF team met with Treasury Secretary Ukur Yatani and Principal Secretary Julius Muia, the Central Bank of Kenya Governor Patrick Njoroge and deputy Sheila M’Mbijjewe, the Office of the President deputy Chief of Staff Ruth Kagia among other government and CBK officials.
The IMF team also met with representatives of the Parliamentary Budget Office, the private sector, civil society organisations, and development partners.