IMF Approves $2.3 Billion Three-Year Funding Plan for Kenya

The International Monetary Fund approved a $2.34 billion financing package for Kenya to support the country’s Covid-19 response and address an urgent need to reduce debt vulnerabilities, Bloomberg News reported. Approval of the so-called Extended Credit Facility and Extended Fund Facility will enable immediate disbursement of about $307.5 million for budget support in the East African nation, the Washington-based lender said Saturday in an emailed statement. “Kenya was hit hard at the onset by the Covid-19 pandemic,” the IMF said. “With a forceful policy response, the economy has been picking up heading into 2021 after likely posting a slight contraction of 0.1% in 2020. Even with this recovery, challenges remain in the return to durable and inclusive growth, and past gains in poverty reduction have been reversed.” Kenya’s debt remains sustainable, although it is at high risk of debt distress, the IMF said. Fiscal and balance-of-payments financing needs remain sizable over the medium term. Support from the G-20 under the Debt Service Suspension Initiative and development partners will contribute to closing the financing gap in 2021, along with financing from capital markets, according to the lender. Read more.