IMF Approves New $ 2.34 Billion Financing Arrangements For Kenya | WKZO | All Kalamazoo
By Andrea Shalal
WASHINGTON (Reuters) – The International Monetary Fund said on Friday that its board had approved new three-year financing deals for Kenya worth $ 2.34 billion to help the African country continue to grow respond to the COVID-19 pandemic and address its debt vulnerabilities.
The approval of the new loans under the Extended Credit Facility and the Extended Fund Facility will result in an immediate disbursement of approximately $ 307.5 million which Kenya can use for budget support, in addition to to the $ 739 million he received in COVID-19 emergency aid in May 2020, the Fund said. in a report.
The IMF said Kenya’s debt remains sustainable, but poses a high risk of debt distress, and the authorities should focus their short-term program on pressing structural policy challenges.
For nearly two years, Kenya gave up costly commercial debt to reduce skyrocketing repayments, while revenue collection was constrained by the pandemic.
It also faces huge budget deficits which have been made worse by the coronavirus crisis.
“The program supported by the EFF / ECF agreements with the Fund provides a strong signal of support and confidence,” IMF Deputy Managing Director Antoinette Sayeh said in a statement. “The Kenyan authorities have shown a strong commitment to tax reforms during this unprecedented global shock, and Kenya’s medium-term outlook remains positive.
Kenya was hit hard initially by the COVID-19 pandemic, but its economy has recovered after likely experiencing a slight contraction of 0.1% in 2020, the IMF said.
He said he expected growth to accelerate sharply to 7.6% in 2021 and 5.7% in 2022, but said Kenya continued to face challenges in returning to sustainable growth, and that its past gains in poverty reduction had been reversed.
The shock of COVID-19 also exacerbated the country’s pre-existing fiscal vulnerabilities, the IMF said, although the Kenyan authorities took steps to keep the budget deficit and debt ratios at 8.7 and 70.4 percent. of GDP, respectively, this exercise.
Supporting a Group of 20 moratorium on debt service payments and development partners will help Kenya close its funding gap in 2021, as well as funding in capital markets.
Sayeh said Kenya was taking steps to reduce debt risks, but should continue to provide the necessary support to the economy and focus on pressing structural policy challenges, including the financial weaknesses of some companies. public.
(Reporting by Andrea Shalal; Editing by Chris Reese and Daniel Wallis)