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| President William Ruto speaking at a past event |
Kenya will receive over KSh 78 billion in loans from the International Monetary Fund (IMF). . On Wednesday, October 30, the IMF board concluded the seventh and eighth reviews, which enabled a combined disbursement of around $606 million (KSh 78.1 billion) to support President William Ruto’s administration in achieving its economic mandates. Why IMF reduced Kenya’s funding
However, the amount is less than the expectation Kenya had in its 2024/25 borrowing plan.The National Treasury projected a combined disbursement of $874 million (KSh 112.7 billion) under the IMF 7th and 8th Reviews to seal its fiscal deficit. However, the Bretton Woods institution settled for KSh 78 billion, noting that the adjustments would lower Kenya’s interest payments. “Following the resolution of exceptional financing needs earlier this year, the Board approved a reduction in the total access under the EFF/ECF arrangements from exceptional access, to within the normal access limits and a rebalancing of access toward the zero-interest ECF arrangement,” the IMF board statement read in part.
Early in October 2024, the international lender lowered the borrowing costs by $1.2 billion (KSh 154.7 billion) or 36% annually. IMF Managing Director Kristalina Georgieva said the decision was based on the challenging global environment and high interest rates. How Kenya will utilise IMF’s KSh 78b loan The board called for the immediate disbursements of $485.8 million (KSh 62.6 billion) under the EFF/ECF arrangements.
The money will address Kenya’s debt vulnerabilities while safeguarding resources for priority social and developmental needs, build resilience to shocks, improve governance and transparency, and support broader economic reforms to realise the country’s medium-term potential. IMF also approved $120.3 million (KSh 15.5 billion) under the RSF arrangement. The funds under this programme will reinforce Kenya’s strong efforts to address climate-related challenges and catalyse further private climate finance.
Why IMF delayed funding to Kenya However, the board pointed out headwinds in Kenya’s fiscal consolidation efforts, including the withdrawal of the Finance Bill 2024. The anti-finance law protests in June 2024 saw the lender pull down and delay funding to the country. US Ambassador Meg Whitman revealed that the Bretton Woods institution halted its June disbursement to Kenya following the move.
by Wycliffe Musalia
