IMF Says Kenya Loans Will Help Reduce Public Debt


– IMF says Kenyan authorities have shown strong commitment to tax reforms during COVID-19 pandemic

– He also said Kenya’s medium-term outlook remains positive

– The global lender said the approved loan is part of two programs, the Extended Credit Facility and the Extended Finance Facility

– The statement came after more than 200,000 angry Kenyans signed an online petition, asking the IMF to cancel the recently approved loan

– According to Kenyans, previous loans were lost due to corruption and remain unpaid

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Following a general outcry from Kenyans, the International Monetary Fund (IMF) on Wednesday April 7 defended its decision to grant Kenya a loan of KSh 255 billion.

The IMF said Kenya’s medium-term outlook remains positive. Photo: IMF.
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IMF Deputy Managing Director Antoinette Sayeh said the money had been disbursed to help Kenya contain public debt.

The lender, in a statement posted on its official website, added that Kenya was in financial difficulty due to the accumulated debts it was managing.

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“Kenya has significant funding needs due to the adverse effects that the COVID-19 pandemic has created.

The central objective of the [IMF loans] program [to Kenya] is to gradually stabilize public debt, ”the IMF said.

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According to the lender, the Kenyan authorities showed a strong commitment to tax reforms during the unprecedented global shock.

He further noted that Kenya’s medium-term outlook remains positive.

According to the IMF, the loan was authorized under two programs, the Extended Credit Facility (ECF) and the Extended Financing Facility (EFF), with a total value of KSh 255 billion.

The Bretton Woods institution also noted that its approval resulted in an immediate disbursement of KSh 33 billion for budget financing.

His third reason for approving the loan was the continuation of another loan in May 2020, equivalent to KSh 80 billion.

The lender said some of Kenya’s financial challenges were outlined in the budget for fiscal year 20220/2021.

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He said all the money loaned to Kenya would not be used for emerging needs, such as combating the adverse effects of COVID-19.

The new loan aims to reduce debt vulnerabilities through several channels such as increasing tax revenues, controlling spending and protecting vulnerable groups.

It also aims to address the weaknesses of public enterprises and strengthen the framework for combating corruption.

“The three-year finance package will support the next phase of the authorities’ response to COVID-19 and their plan to reduce debt vulnerabilities while preserving resources to protect vulnerable groups,” the IMF said.

The global lender further noted that it has also put in place measures to ensure that corruption lords do not steal the money loaned to Kenya.

He expressed optimism that Kenya’s economy will rebound once the difficulties related to COVID-19 abate.

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