This archive report was first published on 6 May 2020.
IMF Approves $739 Million Emergency Loan for Kenya Amid COVID-19 Pandemic ¶
Published on May 6, 2020
The International Monetary Fund (IMF) has approved a $739 million emergency loan for Kenya to help the country respond to the COVID-19 pandemic. The loan will be disbursed under the Rapid Credit Facility (RCF) to address Kenya's urgent balance of payments needs.
The COVID-19 pandemic has had a severe impact on the Kenyan economy, significantly reducing growth and creating fiscal and external financing needs. The IMF has stated that the authorities have taken decisive action to respond to the pandemic's health and economic impacts, but the sudden shock has left Kenya with significant fiscal and external financing needs.
The RCF will help the authorities to address these needs by maintaining an adequate level of international reserves and providing budget financing needed to respond to the pandemic. The IMF is in close contact with the Kenyan authorities and stands ready to provide policy advice and further support, as needed.
According to Deputy Managing Director and Acting Chair, Mr. Tao Zhang, the COVID-19 pandemic has delivered a large economic shock to Kenya, impacting nearly all facets of the economy. He stated that emergency financing under the RCF will deliver liquidity support to help Kenya cover its balance of payments gap this year and provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis.
Mr. Zhang also emphasized the importance of the authorities resuming their fiscal consolidation plans once the crisis abates to reduce debt vulnerabilities. He noted that the Central Bank of Kenya (CBK) has taken various measures to maintain sufficient liquidity in the financial sector and should continue to stand ready to further support the economy and the financial sector's health, as necessary.
The authorities plan to conduct independent post-crisis auditing of COVID-19 related expenditures and publish the results to ensure that the resources are used for their intended purpose.
