IMF Executive Board Completes the 2021 Article IV Consultation and Second Reviews of the Extended Arrangement under the EFF and ECF Arrangements for Kenya

December 17, 2021

  • The IMF Executive Board today completed the 2021 Article IV consultation and Second reviews of the EFF/ECF arrangements with Kenya, allowing for an aggregate immediate disbursement equivalent to about US$ 258.1 million for budget support.
  • The Kenyan authorities have continued to show strong commitment to their reform agenda in a challenging environment and are acting to reduce debt vulnerabilities while maintaining support for the economic recovery.
  • They have maintained careful control of government spending to limit the deficit and are taking steps to reform state-owned enterprises (SOEs) to limit pressure on the budget while protecting social programs.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the 2021 Article IV Consultation [1] and the Second reviews of the 38-month Extended Arrangement under the Extended Fund Facility (EFF) and 38-month arrangement under Extended Credit Facility (ECF) for Kenya. The Board’s decision allows for an aggregate immediate disbursement of SDR 185 million (about US$ 258.1 million), bringing Kenya’s total disbursements for budget support under the arrangements to about US$ 972.6 million.

Kenya’s EFF/ECF arrangements for a total of SDR 1,655 billion (305 percent of quota) or about US$ 2.34 billion at the time of program approval on April 2, 2021 (see Press Release 21/98 ), are aimed at supporting Kenya’s program to address debt vulnerabilities and their response to the COVID-19 pandemic and at enhancing governance.

Kenya showed remarkable resilience to the COVID shock in 2020 and is staging an economic recovery. Growth is now estimated to accelerate to 5.9 percent in 2021. Kenya’s COVID-19 vaccination program has picked up speed in the second half of 2021, though uncertainty and pandemic-related pressures will persist until vaccinations become widely available. The political calendar is also a source of uncertainty.

Kenya’s economic program aims to reduce debt vulnerabilities through multi-year fiscal consolidation efforts centered on raising tax revenues and tightly controlling spending, while safeguarding resources to protect vulnerable groups. The FY21/22 budget delivers on these objectives. A supplementary budget is being prepared, consistent with the flexibility built into the EFF/ECF arrangements, to expand the authorities’ COVID-19 vaccination program, support the SOE reform plan and execute emergency spending related to the drought in the northern regions and security. Given Kenya’s limited fiscal space, the authorities are proactively managing difficult trade-offs with the view to reduce debt vulnerabilities by rationalizing non-priority spending to offset half of the impact of SOE support on the deficit, in line with program commitments.

Kenya has also made notable advances on its structural reform and anti-corruption agendas. Fiscal governance and transparency will be bolstered by the authorities’ action plan to address legal impediments that prevented the publication of beneficial ownership information related to public procurements and by planned audits of COVID-19 vaccine spending and of FY20/21 expenditure with a focus on COVID-19-related spending. As part of their strategy to address challenges in the SOE sector and put firms on a financially viable footing, the authorities are formulating robust restructuring strategies with safeguards to protect the Exchequer’s financial interest. The authorities also plan to further enhance their monetary policy framework and to continue supporting financial stability.

At the conclusion of the Executive Board’s discussion, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:

“The Kenyan authorities remain firmly committed to their economic program in a challenging environment. The program performance has been robust. All quantitative targets were met – the FY 2020/21 outturn overperformed – and all 2021 structural benchmarks are now completed except one.

“The authorities should continue executing their multi-year fiscal consolidation plan to reduce debt vulnerabilities. Some additional fiscal space is needed in FY21/22 for emergency spending to face the drought in the north and emerging security needs; the planned supplementary budget should also provide resources for expanding COVID-19 vaccinations and SOEs support, in line with program design. Strengthening domestic revenue mobilization, maintaining expenditure control while protecting priority social spending and improving spending efficiency will remain essential. Bold political commitment by all levels of government is needed to ensure the FY22/23 budget is aligned with the authorities’ program.

“Proactive efforts to address fiscal risks from state-owned enterprises (SOEs) should continue. Financial support to SOEs will require difficult tradeoffs and adequate safeguards given Kenya’s limited fiscal space and the need to maintain debt sustainability.

“Further strengthening fiscal transparency and governance requires more proactive efforts. The authorities should address legal impediments to begin publishing beneficial ownership information for awarded public tenders in early 2022 , proceed with planned audits of COVID-19 spending, and promptly act to follow up on previous audits.

“Well-calibrated Central Bank of Kenya policies have supported economic resilience and the banking sector. The stance of monetary policy should remain accommodative as long as inflation expectations remain well anchored.

“The program is subject to increasing global and domestic risks, including from the pandemic, tightening global financing conditions, and potential pressures from the upcoming political calendar. Kenya’s medium-term prospects remain positive, and the authorities’ continued commitment to their economic program is essential to maintain macroeconomic balance, while ensuring a more sustainable, greener, and inclusive growth.”

Table 1. Kenya: Selected Economic Indicators, 2020–23










Real GDP growth (%)






Inflation - average (%)





Central Government Finances (fiscal year)1

Revenue (% GDP)





Expenditure (% GDP)





Primary balance (% GDP)





Fiscal balance (% GDP)





Public debt (% GDP)





Money and Credit

Broad money (% change)





Credit to private sector (% change)





Policy rate, end of period (%)


Balance of Payments

Current account (% GDP)





Reserves (in months of imports)





External debt (% GDP)





Exchange Rate

REER (% change)


[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

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