The International Monetary Fund (IMF) on Wednesday approved a $941 million lending boost to Kenya, with an immediate disbursement of $624.5 million.
The disbursement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs will also be topped by a release of $60.2 million under the Resilience and Sustainability Facility (RSF) arrangement.
The executive board sign-off brings the IMF’s total funding commitment to Kenya under all three facilities to more than $4.4 billion.
“Kenya’s growth remained resilient in the face of increasing external and domestic challenges. The EFF/ECF and RSF arrangements continue to support the authorities’ efforts to sustain macroeconomic stability,” the IMF said.
This financing is precautionary, as Kenya plans not to draw on it unless the balance of payments comes under pressure.
The financing package approved by the Board involves “blended access”—combined general and concessional resources comprising a $504.3 million Stand-By Arrangement and a $194 million arrangement under the Stand-By Credit Facility. The move makes available a total of $543 million up front, with the remainder available in two equal tranches upon completion of semi-annual program reviews.
Kenya’s rising income and a track record of access to international markets justifies the country’s eligibility for blended access financing. The frontloaded access is consistent with risks to the outlook tilted to the downside in the near term, in case the economy is affected by a sudden shift in global investors’ risk sentiment, a deterioration of security conditions, or large weather-related shocks.
The new financing package thus represents an effort to tailor existing Fund facilities to the specific insurance needs of the country. This is the first financing package of this type approved by the Fund for a “frontier” market—second-generation emerging market country—in sub-Saharan Africa.
Additional Source: IMF
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