Kenya asks IMF for precautionary loan of about Sh68bn

Kenya has asked the International Monetary Fund for a precautionary loan of about $750 million (Sh68 billion) to help it deal with any future shocks to the economy, the IMF's resident representative said on Monday.

Armando Morales told Reuters the request was contained in a letter from the Kenyan government received by the IMF last Friday. The request will be considered by the IMF board on Feb 2, he said, adding the facility could help the east African nation deal with a range of potential shocks.

"They could be weather-related. They could be security-related. It could also be a change in foreign investor sentiments affecting capital inflows," Morales said.

The shilling weakened gradually last year after a series of gun and grenade attacks scared off tourists, slowing inflows from an important source of foreign exchange. It is down 1.22 per cent this year mainly due to a firmer dollar.

READ: Kenyan shilling expected to weaken in days ahead

If the insurance type-loan is granted by the IMF, it will run for one year with the option for renewal, Morales said. IMF loans to Kenya are usually used to shore up the central bank's foreign exchange reserves to cushion the economy from shocks.