WASHINGTON: Kenya obtained nearly $700 million worth of precautionary loan support from the International Monetary Fund on Monday as the country undertakes important economic reforms.
The IMF approved a $497.1 loan under its Stand-By Arrangement facility and another $191.2 million under its Standby Credit facility.
Both are one year loans that the IMF said Nairobi does not plan to draw on “unless external shocks lead to an actual balance-of-payment need.”
“The Kenyan authorities’ prudent macroeconomic policies and major institutional and economic reforms of recent years have contributed to macroeconomic stability, higher growth, and increased external buffers,” IMF deputy managing director Naoyuki Shinohara said.
“Nonetheless, the economy remains vulnerable to shocks arising from Kenya’s growing integration into global markets, security concerns, and extreme weather events.
“In this context, the new arrangements with the Fund provide a policy anchor for continued reforms, and would mitigate the impact of shocks if they materialize.”
The Kenyan economy is expected to grow 6.1 percent in the year to June 30, picking up to 7.0 percent in the next year.
But the IMF said that poor rains have hit the agricultural sector, and security problems are also hampering tourism.