Kenya’s access to interest-free resources from the International Monetary Fund (IMF) has been bolstered by reforms undertaken by the lender to enhance allocations to members.
The IMF revealed last week that its Executive Board agreed to increase access limits under the Poverty Reduction and Growth Trust (PRGT), the fund’s concessional lending arm whose facility is currently set at a zero percent interest rate.
The multilateral lender raised access limits under the facility to an annual limit of 200 percent of members’ quotas while the cumulative access limit is up to 600 percent of quota until the end of 2024.
“The temporary increase in PRGT access limits will allow more flexibility in the Fund’s support to countries with large balance of payments needs and facilitate their implementation of strong economic programmes that help maintain or restore sustainable economic positions and inclusive growth,” the IMF said in a statement.
Kenya has been a beneficiary of funding from the concessional PRGT facility with the country’s 48-month funding arrangement with the IMF being partly sourced from the interest-free fund.
According to a July IMF report covering the multi-year programme with Kenya, the country is expected to have accessed about 11.6 percent of its quota at the IMF or Sh7.2 billion ($46.89 million) by May 7, 2024.
IMF Mission Chief to Kenya Haimanot Teferra. PHOTO | POOL
The temporary adjustment of the PRGT access limits allows Kenya to obtain more resources from the IMF under its continuing 48-month programme.
On November 16, IMF staff and Kenyan authorities reached a staff-level agreement on economic policies and reforms to conclude the sixth review an augmentation of Kenya’s multi-year arrangement under the Extended Credit Fund and Extended Fund Facility).
The IMF staff also considered the further augmentation of the arrangements which would bring the IMF's total commitment at the end of the duration of the program to Sh681.2 billion ($4.43 billion).
The IMF noted the scaled support for Kenya was crucial to guiding the country’s return to the international capital markets.
“The tightening global financing conditions for frontier economies and global geopolitical tensions are compounding the challenges from the legacy of the pandemic and multi-season drought, further straining Kenya's balance of payments and fiscal financing requirements. The authorities’ strong reform programme aims to enhance macroeconomic stability and restore confidence to ensure access to the international bond markets,” noted the head of the IMF staff mission to Kenya, Haimanot Teferra.
So far, Kenya has accessed Sh313.6 billion ($2.04 billion) from the IMF since the first approval of the arrangements on April 2, 2021.
The funding under the arrangement is usually split between the general resource account, the PRGT and the Resilience and Sustainability Facility which provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payment stability.
