IMF approves $2.3 billion aid package for Kenya amidst COVID-19 crisis

The International Monetary Fund (IMF), on April 2, approved a 2.34 billion aid package for Kenya, a move that is expected to mitigate the effect of a worsening health and economic crisis in the African state. The funds would be equally spread over a period of 38 months, beginning with an immediate disbursement of $307.5 million. In a statement later, the IMF asserted that the monetary aid would support the Kenyan government's COVID-19  response while also supporting their plan to reduce debt vulnerabilities. 

“The Executive Board of the International Monetary Fund (IMF) approved 38-month arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya in an amount equivalent to SDR 1.655 billion (305 per cent of quota or about US$2.34 billion) to support the next phase of the authorities’ COVID-19 response and address the urgent need to reduce debt vulnerabilities.” statement read. 

Kenya's plunging GDP

According to the official data by IMF, Kenya’s Gross Domestic Product (GDP) grew by -0.1 per cent in the year 2020. The monetary body has predicted it to grow by 7.6 per cent in 2021, 5.7 per cent in 2022 and 6.1 per cent in 2023. However, IMF said that even with the expected recovery, “challenges remain in the return to durable and inclusive growth, and past gains in poverty reduction have been reversed”.

“The authorities’ program would set a basis for a resurgence of growth and shared prosperity. Building on critical steps already taken, it aims to reduce debt vulnerabilities through a multi-year fiscal consolidation effort centred on raising tax revenues and tightly controlling spending, safeguarding resources to protect vulnerable groups. It will also advance the structural reform and governance agenda. Finally, it will strengthen the monetary policy framework and support financial stability,” IMF said about its aid. 

The aid comes as the head of the International Monetary Fund, Kristalina Georgieva, said that the prospects of global growth have increased since the month of January. However, she further warned that uneven progress in fighting the pandemic could hamper economic growth. Georgieva on Tuesday, March 30 said that IMF releases will release its economic forecast next week and it will show the global economy growing at a faster pace than the 5.5 per cent gain it projected at the start of the year.

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