NAIROBI, May 23 (Xinhua) -- The International Monetary Fund (IMF) said Tuesday it has reached a staff-level agreement with Kenya, paving the way for the immediate release of a 410-million-U.S. dollar loan.
The IMF said the agreement on economic policies and reforms now concludes the fifth review of Kenya's extended credit facility (ECF) and extended fund facility (EFF) arrangements which were approved in 2021.
The lender also said it reached an agreement with Kenya on the extension of the program and augmentation of access under those arrangements; and reforms for access under a 20-month Resilience and Sustainability Facility (RSF).
"The agreement is subject to IMF management approval and consideration by the executive board, which are expected in July. Upon completion of the fifth review by the IMF executive board, Kenya would have immediate access to about 410 million dollars, including from the augmentation of access under the ECF/EFF," Haimanot Teferra, who led a staff mission to Kenya from May 9-22, said in a statement.
Teferra said this would bring total IMF financial support disbursed under the EFF and ECF arrangements to 2.02 billion dollars but with the EFF/ECF augmentations and the RSF support, the total IMF commitment under these arrangements would be 3.52 billion dollars.
The loan, which was approved in April 2021, aims to support Kenya's program to address debt vulnerabilities, respond to the COVID-19 pandemic and global shocks, and enhance governance and broader economic reforms.
The IMF said the Kenyan economy has been strained by a challenging environment while the private sector has generally remained resilient. It also said real GDP growth remained robust at 4.8 percent in 2022 despite a contraction in agriculture as the country experienced the worst drought in decades.
According to the IMF, the government budget has been under pressure from shortfalls in revenue collection and challenging financing conditions.
It said inflation declined to 7.9 percent in April but remains above the target range while the functioning of the foreign exchange is gradually improving.
"The authorities have responded promptly to the challenges. On the fiscal side, government spending execution has been prudent this fiscal year, consistent with available resources," Teferra said.
She said the draft FY2023/24 budget submitted to Parliament proposes to further reduce the deficit from 5.7 percent to 4.1 percent of gross domestic product (GDP), with significant new revenue measures consistent with the objective of reducing the ratio of debt to GDP.