IMF responds on why it approved Ksh142 billion loan for Kenya
Kenya had made a good case on why it needed Ksh142 billion loan according to an IMF representative
Kenya had made a good case on why it needed Ksh142 billion loan according to an IMF (International Monetary Fund) representative.
The International Monetary Fund (IMF) on Wednesday, July 19, provided explanations for why it had decided to advance the facility despite worries about the country’s rising debt after the reasons behind its decision to approve a Ksh142 billion loan to Kenya were widely speculated.
IMF Mission Chief for Kenya Haimanot Teferra said during a press conference that Kenya had presented a strong case for why the funds were required and a workable repayment plan.
Teferra emphasized that by displaying its admirable efforts to mobilize local money through concrete initiatives, the Kenya Kwanza administration successfully established the absence of any default risk.
She also emphasized that the fund was particularly impressed with the government’s strategy for reducing borrowing by making sure that revenue was not solely used to pay off debts.
Teferra further noted that the country had demonstrated proof of spending efficiency through the institution of austerity measures.
Some of the austerity measures that President William Ruto has implemented include; reducing non-essential spending on traveling, advertising, and training.
IMF also noted that it was comfortable with the Central Bank of Kenya’s (CBK’s) reserve position.
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Teferra expressed confidence in CBK’s policies instituted to ensure that the country was in a good position to meet its obligations in terms of repaying loans.
IMF was tasked to explain what would happen if Kenya defaulted since the loan was largely dependent on the country raising extra revenue through the Finance Act, of 2023.
The mission chief noted that while IMF was monitoring the situation on whether the suspension of the Finance Act would be lifted, the institution was not entirely worried about Kenya defaulting.
“The authority (Kenya) was able to provide us with contingency plans on how the loan would be repaid,” she explained.
According to Teferra, Ruto’s government had laid out different repayment plans including contingency plans in case the Finance Act is thrown out by the courts.
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