## IMF Executive Board Approves US$2.34 Billion ECF and EFF Arrangements for Kenya _IMF News, April 2, 2021_ ## Source details **Canonical URL:** [IMF Executive Board Approves US$2.34 Billion ECF and EFF Arrangements for Kenya](https://www.imf.org/en/news/articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements) ## Other formats - [Markdown version](/en/news/articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements/index.md) - [Structured JSON version](/en/news/articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements/index.json) - [Bundle manifest](/en/news/articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements/bundle-manifest.json) ## Bibliographic details - Published: April 2, 2021 --- ### Approval and Financing - Executive Board approved 38-month arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya equivalent to SDR 1.655 billion (305 percent of quota or about US$2.34 billion). - Approval enables immediate disbursement of about US$307.5 million, usable for budget support. - This follows Fund emergency support to Kenya in May 2020 (100 percent of quota, equivalent to US$739 million at the time of approval). ### Economic context and outlook - Kenya likely posted a slight contraction of 0.1 percent in 2020, with the economy picking up heading into 2021. - The COVID-19 shock exacerbated pre-existing fiscal vulnerabilities; past gains in poverty reduction have been reversed. - Medium-term fiscal and balance-of-payments financing needs remain sizable; support from the G-20 under the Debt Service Suspension Initiative (DSSI) and development partners, along with capital market financing, will contribute to closing the 2021 financing gap. ### Fiscal and debt stance - Authorities have taken action to hold the fiscal deficit and debt ratios to 8.7 and 70.4 percent of GDP, respectively, in this fiscal year. - Kenya’s debt remains sustainable but is at high risk of debt distress. - Program incorporates flexibility to recognize near-term challenges related to tax yields and possible contingent liabilities from the SOE sector. ### Program objectives, structural reforms, and governance - The three-year financing package will support the next phase of the authorities’ COVID-19 response and the plan to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups. - Core program elements: - Reduce debt vulnerabilities through a multi-year fiscal consolidation effort centered on raising tax revenues and tightly controlling spending, while safeguarding social and development spending. - Advance structural reform and governance agenda, including addressing weaknesses in some state-owned enterprises (SOEs). - Strengthen transparency and accountability through the anticorruption framework and advance the AML/CFT agenda. - Strengthen the monetary policy framework and support financial stability. - The program recognizes the need to prioritize revenue administration, spending efficiency, and fiscal transparency. - The Central Bank of Kenya’s (CBK) proactive policy stance should remain accommodative within the inflation targeting regime; the exchange rate should continue to function as a shock absorber; close supervision of credit risks and provisioning should be maintained. ### Risks, flexibility, and political considerations - The program provides a strong signal of support and confidence but is subject to notable risks, including uncertainty about the path of the pandemic and the upcoming political calendar. - The program incorporates flexibility to accommodate near-term tax yield challenges and potential SOE contingent liabilities. - Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, emphasized the need for steadfast pursuit of program objectives and noted Kenya’s demonstrated commitment to fiscal reforms during the global shock. ### Selected Economic Indicators, 2020—2023 (Kenya: Selected Economic Indicators) - Output - Real GDP growth (%): 2020 Est. -0.1; 2021 Proj. 7.6; 2022 5.7; 2023 6.1 - Prices - Inflation - average (%): 2020 Est. 5.3; 2021 Proj. 5.0 - Central government finances (fiscal year)1 - Revenue (% GDP): 2020 Est. 17.2; 2021 Proj. 17.0; 2022 16.8; 2023 17.6 - Expenditure (% GDP): 2020 Est. 25.0; 2021 Proj. 25.7; 2022 24.3; 2023 23.5 - Fiscal balance (% GDP): 2020 Est. -7.8; 2021 Proj. -8.7; 2022 -7.5; 2023 -5.8 - Public debt (% GDP): 2020 Est. 65.8; 2021 Proj. 70.4; 2022 72.6; 2023 72.9 - Money and Credit - Broad money (% change): 2020 Est. 10.6; 2021 Proj. 11.8; 2022 11.4 - Credit to private sector (% change): 2020 Est. 7.7; 2021 Proj. 7.8; 2022 10.1 - Policy rate, end of period (%): 2020 Est. 7.0; 2021 Proj. … - Balance of payments - Current account (% GDP): 2020 Est. -4.8; 2021 Proj. -5.3; 2022 -5.4; 2023 -5.5 - Reserves (in months of imports): 2020 Est. 4.6; 2021 Proj. 4.3; 2022 4.1 - External debt (% GDP): 2020 Est. 35.6; 2021 Proj. 37.8; 2022 37.6; 2023 36.7 - Exchange rate - REER (% change): 2020 Est. -1.5 *IMF Communications Department, Press Release No. 21/98, April 2, 2021.* --- ## References - [https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh](https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh) - [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/) - [Extended Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility) - [Extended Fund Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/56/Extended-Fund-Facility) - [No. 20/208](https://www.imf.org/en/News/Articles/2020/05/06/pr20208-kenya-imf-executive-board-approves-us-million-disbursement-address-impact-covid-19-pandemic) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements_