The Executive Board of the International Monetary Fund (IMF) has approved the disbursement of a Sh78.3 billion ($606.1 million) loan to Kenya, unlocking new funding to the country after a protracted programme review following the withdrawal of the Finance Bill, 2024.
The disbursement, signed on Thursday morning, covers releases under the seventh and eighth reviews of the extended credit facility and the extended fund facility (ECF/EFF).
The new funding also captures the second review of the Resilience and Sustainability Fund (RSF) – a climate change-linked programme to help Kenya implement mitigation measures.
The IMF and the Kenyan authorities agreed to combine the seventh and eighth reviews of the EFF/ECF programme, following the lengthy pause in funding caused by the rejection of new tax measures that anchor the arrangement.
However, the combined disbursement is a far cry from the mega release the government had expected from the dual review.
The National Treasury had expected to book Sh113 billion from the seventh and eighth reviews.
The IMF did not provide reasons for the lower disbursement but maintained the financial commitment under the ECF/EFF at Sh466.3 billion ($3.61 billion) and the RSF at Sh69.9 billion ($541.3 million).
The IMF noted that the withdrawal of the Finance Bill, 2024 had disrupted Kenya’s path to fiscal consolidation, but said the new framework represented by the first 2024/25 supplementary budget was an adequate corrective measure.
“Fiscal consolidation efforts have faced headwinds following a sizable revenue shortfall in FY2023/24 and withdrawal of the 2024 Finance Bill after widespread public protests. Nevertheless, the ECF/EFF programme has delivered on reducing inflation, strengthening external buffers and stabilising the exchange rate,” the IMF said in a statement on Thursday.
