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What next? Kenya allows IMF cushion to sink

Treasury secretary Henry Rotich
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

Kenya will not seek an extension of the $989.8 million (Sh99.89 billion) precautionary loan from the International Monetary Fund (IMF) which expires on Friday, Treasury secretary Henry Rotich said.

The IMF extended the two-year loan which expired in March for another six months on condition that Kenya implements a raft of reforms such as scrapping of caps on loan charges and cutting budget deficit by growing taxation revenue.

The facility, which was to be repaid in five years, was meant to cushion the shilling from external shocks such as increased imports and debt repayment pressures against forex earnings from exports and diaspora remittances.

“IMF programmes, especially stand-by (facilities), are short-term, with a maximum of two years. After that you are supposed to graduate and get out of it,” Mr Rotich said.

“But we can still engage and get back to it if we feel it’s still necessary. We will continue to engage with the Fund.”

The initial loan was $1.5 billion (Sh151.38 billion), but the $494.9 million (Sh49.95 billion) interest-free portion was not extended upon expiry last March.

The CS said the country has kept its macroeconomic fundamentals such as inflation and the shilling stable over the period that the cautionary IMF period was in place.

“We continue to build our reserves. We did not draw down on the IMF programme. It definitely say Kenya has come of age about reliance on IMF programmes, but we will continue to engage on new facilities or arrangement that suits Kenya going forward,” he said.

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