Kenya: Working Towards Economic Recovery
In the face of extraordinary challenges, Kenya has demonstrated a strong commitment to economic reform. The IMF Executive Board has just completed its first review of Kenya’s IMF-backed economic program. And in just the first three months, they’ve achieved much. That’s why Kenya will immediately receive about $407 million as part of the total $2.34 billion financing that’s available under the Extended Fund and Extended Credit Facility arrangements. This amount is priced well below market borrowing.
With their plan, which is backed by the IMF, Kenya has the support it needs for the next phase of the COVID-19 response and for addressing the urgent need to reduce debt vulnerabilities and for improving governance.
First, the Kenyan authorities have decided to accelerate their COVID-19 vaccination rollout. The IMF program supports this, although reaching vaccination targets still depends on global vaccine availability.
Second, Kenya has proposed a budget that includes the fiscal consolidation measures, which are needed to reduce its debt vulnerability. The budget also secures funding for much-needed social and development spending and maintains support for key sectors affected by the pandemic.
And third, as part of a larger overall strategy that [to] tackle financial difficulties at Kenyan state-owned enterprises or SOEs, the authorities have evaluated finances of 19 SOEs with the largest fiscal risks. As the government looks to improve its oversight and management of SOEs, these measures will help to identify least-cost approaches to solving financial challenges.
The IMF arrangements also provide support for the anti-corruption agenda in Kenya. Important advances are being made already. To boost fiscal transparency and accountability in the use of public resources, the country recently published comprehensive audits of COVID-19 spending and plans to disclose ownership information of companies awarded public procurement contracts. Follow-up by the appropriate institutions in Kenya on the problems identified by the audits should also be a priority.
Overall, the IMF is greatly encouraged by the progress that Kenya has made to protect its people, its finances, and its future under the most challenging of circumstances.