The International Monetary Funds has approved an additional loan to Kenya to help in the fight against the COVID-19 pandemic.
The 38-month program will see Kenya receive a total of Ksh.255.1 billion ($2.34 billion), over and above the initial disbursements totaling to Ksh.33.5 billion ($307.5 million).
The financing is expected to support the next phase of the country’s COVID-19 response and address the urgent need to reduce debt vulnerabilities.
The IMF Executive Board said that Kenya had been hit hard at the start of the pandemic. While the country had started making a recovery heading into 2021, challenges remained.
“With a forceful policy response, the economy has started picking up heading into 2021 after posting a slight contraction of 0.1 % in 2020.” The IMF Executive Board said.
The IMF says the program, which reached a staff level agreement earlier in February this year, charts a clear path to reduce Kenya’s debt-related risks.
Approval of the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) enables immediate disbursement of about US$307.5 million, usable for budget support. This follows Fund emergency support to Kenya in May 2020 (100 percent of quota, equivalent to US$739 million at the time of approval).
The ECF provides countries with financial assistance but gives them protracted payments balance problems.
IMF also gives the (EFF) when a country faces serious medium-term balance of payments problems due to slow growth. It provides support for programs to correct the structural imbalance.
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