## Press Release: IMF Executive Board Approves New Arrangements for Kenya Totaling US$1.5 billion

_IMF News, March 14, 2016_

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**Canonical URL:** [Press Release: IMF Executive Board Approves New Arrangements for Kenya Totaling US$1.5 billion](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16110)

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## Bibliographic details
- Published: March 14, 2016

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### Approved arrangements and access
- The Executive Board approved a new SDR 709.259 million (about US$989.8 million) 24-month Stand-By Arrangement (SBA).
- The Executive Board approved a SDR 354.629 million (about US$494.9 million) 24-month Standby Credit Facility (SCF).
- Combined access of the new arrangements: SDR 1.06 billion (about US$1.5 billion, or 196 percent of Kenya’s quota).
- Today’s decision would make available SDR 542.8 million (about US$757.5 million) immediately, with the remainder in four tranches upon completion of semi-annual program reviews.
- The Kenyan authorities indicated they will treat both arrangements as precautionary and do not intend to draw on them unless exogenous shocks lead to an actual balance of payments need.

### Background and prior arrangements
- The Executive Board completed the second and final reviews under the previous SBA and SCF for Kenya.
- The previous SBA and SCF were initially for 12 months with a combined total access of SDR 488.52 million (about US$688 million) and were approved on February 2, 2015 (see Press Release No. 15/29).
- The prior arrangements were extended until March 15, 2016 on January 27, 2016.

### Macroeconomic outlook and vulnerabilities (remarks by Mr. Min Zhu)
- Kenya’s recent growth performance remains robust and the outlook is positive.
- The economy remains vulnerable to shocks, reflecting:
  - less favorable global financial market conditions,
  - continued security threats,
  - potential extreme weather events.
- The new precautionary arrangements would provide a policy anchor for continued macroeconomic and institutional reform and help mitigate the impact of potential exogenous shocks if they were to materialize.

### Fiscal policy guidance
- The envisaged reduction of the fiscal deficit by 3 percent of GDP over the next two years through a well-balanced policy mix would:
  - maintain space for high-priority infrastructure investments,
  - enable greater provision of health and education services in a sustainable manner.
- Continued public financial management reforms—aimed at upgrading efficiency, transparency and accountability—are key to containing risks and to complement envisaged fiscal consolidation.

### Monetary policy guidance
- The Central Bank of Kenya is committed to gradually reducing inflation to the mid-point of its target range (5+/- 2.5 percent).
- To achieve their inflation objective, the authorities will:
  - align the interbank rates with the policy rate,
  - formally announce and implement an interest corridor,
  - thereby strengthen the monetary policy transmission mechanisms in the context of a floating exchange rate regime.

### Financial sector and crisis preparedness
- The authorities are taking actions to preserve financial stability, including:
  - steps to strengthen micro and macro prudential stress testing,
  - steps to strengthen the capital adequacy assessment framework,
  - development of a legal and operational crisis management system.

### Data, governance, and inclusive growth
- Continued improvement in the quality of macroeconomic statistics and strengthening the business climate will be key to:
  - promoting transparency,
  - supporting evidence-based policy making,
  - supporting inclusive growth.

*Press Release No. 16/110, March 14, 2016, IMF COMMUNICATIONS DEPARTMENT.*

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## References

- [Kenya and the IMF](http://www.imf.org/external/country/KEN/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 15/29](https://www.imf.org/external/np/sec/pr/2015/pr1529.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16110_