Kenya Seeks $2.3bn Loan From IMF to Help Economic Recovery

Kenya is seeking a loan of as much as $2.3 billion from the International Monetary Fund under the lender’s extended fund facility. Talks on a possible 3 1/2-year loan program are expected to conclude early next year, with Kenya eyeing an initial disbursement of about $725 million in the fiscal year that runs through June, National Treasury Cabinet Secretary Ukur Yatani said in an interview with Bloomberg.

Among objectives of the loan is “continuous support of Kenya’s Covid-19 response,” Yatani said. “We are also looking at areas of reduced debt vulnerabilities through a revenue-driven fiscal consolidation.” Yatani wants to raise and conserve funds as part of a plan to support sub-Saharan Africa’s third-largest economy after the pandemic hit public revenue and further clouded plans for fiscal consolidation.

Funding constraints have forced the government to scale back on some projects under President Uhuru Kenyatta’s so-called Big Four agenda to boost housing, manufacturing, health care and farming, according to Yatani. The National Treasury expects economic expansion this year will be under 1%, compared with growth of 5.4% in 2019. Separately, the government is holding talks with the World Bank for a development policy operation, or DPO, loan of about $1 billion to $1.5 billion.