IMF approves disbursement of $739 million loan money to Kenya to respond to COVID-19

The executive board of the International Monetary Fund (IMF) on Wednesday approved the disbursement of $739 million loan money to Kenya to respond to COVID-19.

IMF said the loan, to be drawn under the Rapid Credit Facility (RCF), will help to meet Kenya’s urgent balance of payments need stemming from the outbreak of the COVID-19 pandemic

Mr. Tao Zhang, IMF Deputy managing Director and Acting Chair, said the COVID-19 pandemic has “delivered a large economic shock to Kenya.”

“The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs,” he said.

“Emergency financing under the RCF will deliver liquidity support to help Kenya cover its balance of payments gap this year. It will provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis. It will also catalyze necessary financing from other donors,” Mr. Zhang added.

More broadly, Mr. Zhang implied that the loan was justified and a “pause in the authorities’ fiscal consolidation plans to accommodate COVID-19-related measures is appropriate.”

“These measures should be temporary and well-targeted. Once the crisis abates, it is critical that the authorities resume their pursuit of a growth-friendly medium-term fiscal adjustment, including raising revenues as a share of GDP, to reduce debt vulnerabilities,” he added.

According to him, “the Central Bank of Kenya (CBK) has taken various measures to maintain sufficient liquidity in the financial sector. It should continue to stand ready to further support the economy and the financial sector’s health, as necessary, while ensuring that policy decisions are data-driven. The CBK should also continue to allow the exchange rate to act as a shock absorber.

“To ensure that COVID-19 related resources are used for their intended purpose, the authorities plan to conduct independent post-crisis auditing of COVID-19 related expenditures and publish the results.”

Chief White House Correspondent for

Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.

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