## IMF Staff Completes Virtual Mission to Kenya

_IMF News, November 20, 2020_

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**Canonical URL:** [IMF Staff Completes Virtual Mission to Kenya](https://www.imf.org/en/news/articles/2020/11/20/pr20351-kenya-imf-staff-completes-virtual-mission)

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## Bibliographic details
- Published: November 20, 2020

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### Mission summary
- A staff team from the International Monetary Fund (IMF) led by Mary Goodman conducted a virtual mission to Kenya from October 27 to November 17, 2020, to undertake negotiations on a 3½ year Extended Fund Facility (EFF)/Extended Credit Facility (ECF) arrangement.
- End-of-mission statement conveys preliminary findings; views are those of IMF staff and do not necessarily represent the IMF’s Executive Board.
- Technical work will continue with a view to reaching agreement on a program that could be presented to the Fund’s Board in early 2021.

### Economic impact and outlook
- Kenya has suffered an unprecedented shock as a result of the COVID-19 pandemic.
- Real GDP contracted by 5.7 percent year-on-year in the second quarter of 2020.
- Economic activity started to show signs of recovery from the trough in April-May, but the services sector suffered a significant contraction in output.
- Remaining sectoral weaknesses include tourism and education.
- Agriculture remained strong thanks to above-average rainfall.
- External accounts have remained resilient due to solid growth in goods exports (particularly horticulture and tea), remittances, and reduced imports partly resulting from lower oil prices.
- Inflation has remained in check at 4.8% year-on-year in October.
- Financial sector vulnerabilities have been contained and the banking system remains well capitalized overall.
- Key challenges: reduced government tax revenue and rising public debt, which reached 65.9 percent of GDP in FY19/20.

### Program discussions and policy directions
- The mission discussed a program to support the next phase of Kenya’s COVID-19 response with the following core elements:
  - Provide resources to protect vulnerable groups.
  - Reduce debt vulnerabilities over time through a multi-year fiscal consolidation centered on raising tax revenues.
  - Advance structural reform and governance agenda and address weaknesses in some state-owned enterprises (SOEs) exacerbated by the COVID-19 shock.
  - Strengthen the monetary policy framework and support financial stability.
  - Incorporate elements of flexibility in program design to accommodate high uncertainty about the evolution of COVID-19 and the path of economic recovery.
- There is broad agreement on the policy objectives that would underpin a Fund-supported program.
- Remaining issues to firm up include:
  - The scope of SOE weaknesses.
  - Plans to revise the budget for FY2020/21 to address these and other pressure points.
  - Some elements of the medium-term strategy.

### Next steps and stakeholder engagement
- Discussions will continue in the period ahead; technical work will continue with a view to reaching agreement on a program for Board consideration in early 2021.
- The mission thanked the authorities for hospitality and constructive discussions.
- The team met with:
  - Cabinet Secretary for the National Treasury, Mr. Ukur Yatani;
  - Governor of the Central Bank of Kenya (CBK), Dr. Patrick Njoroge;
  - Head of the Public Service, Mr. Joseph Kinyua;
  - Principal Secretary for the National Treasury, Dr. Julius Muia;
  - Deputy Governor of the CBK, Ms. Sheila M’Mbijjewe;
  - Auditor General, Ms. Nancy Gathungu;
  - Other senior government and CBK officials, private sector representatives, civil society organizations, and development partners.

*Press Release No. 20/351, November 20, 2020.*

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## References

- [IMF COVID-19 Hub](https://www.imf.org/en/Topics/imf-and-covid19)
- [Policy Tracker](https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19)
- [Financial Assistance](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)
- [Questions & Answers](https://www.imf.org/en/About/FAQ/imf-response-to-covid-19)
- [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/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2020/11/20/pr20351-kenya-imf-staff-completes-virtual-mission_