The government’s response to the Covid-19 pandemic has received a boost after International Monetary Fund (IMF) Executive Board on Wednesday, May 6th, approved the disbursement of $739 million (Sh78.3 billion) to Kenya.
The amount, which was channeled through IMF’s Rapid Credit Facility (RCF), will be used to cater for Kenya’s urgent balance of payments precipitated by the global health crisis.
“The impact of COVID-19 on the Kenyan economy will be severe. It will act through both global and domestic channels, and downside risks remain large. While the authorities have taken decisive action to respond to the pandemic’s health and economic impacts, the sudden shock has left Kenya with significant fiscal and external financing needs,” IMF said in a statement.
“Authorities have committed to resume their fiscal consolidation plans once the crisis abates to reduce debt vulnerabilities.”
The loan will also support Kenya’s liquidity following shocks to its funding due to reduced Forex earnings from exports and tourism, IMF Deputy Managing Director Tao Zhang 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,” he noted.
The IMF loan is also expected to strengthen Kenya’s usable foreign currency reserves providing a further shield to the shilling.
The funding comes amid accountability concerns from Kenyans over the expenditure of money allocated towards Covid-19 response.