## IMF Executive Board Completed the Fifth Reviews of Kenya’s Extended Fund Facility and Extended Credit Facility Arrangements and Approves Arrangement under the Resilience and Sustainability Facility _IMF News, July 17, 2023_ ## Source details **Canonical URL:** [IMF Executive Board Completed the Fifth Reviews of Kenya’s Extended Fund Facility and Extended Credit Facility Arrangements and Approves Arrangement under the Resilience and Sustainability Facility](https://www.imf.org/en/news/articles/2023/07/17/pr23265-kenya-imf-executive-board-completed-fifth-reviews-eff-ecf-approves-rsf) ## Other formats - [Markdown version](/en/news/articles/2023/07/17/pr23265-kenya-imf-executive-board-completed-fifth-reviews-eff-ecf-approves-rsf/index.md) - [Structured JSON version](/en/news/articles/2023/07/17/pr23265-kenya-imf-executive-board-completed-fifth-reviews-eff-ecf-approves-rsf/index.json) - [Bundle manifest](/en/news/articles/2023/07/17/pr23265-kenya-imf-executive-board-completed-fifth-reviews-eff-ecf-approves-rsf/bundle-manifest.json) ## Bibliographic details - Published: July 17, 2023 --- ### Executive summary and program decisions - The Executive Board completed the fifth reviews under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements for Kenya. - Immediate disbursement authorized: SDR306.7 million (about US$415.4 million), including SDR81.4 million (about US$110.3 million) from augmentation of access. - Total disbursements under the arrangements so far: SDR1.51 billion (about US$2.04 billion). - EFF/ECF arrangements extended from 38 months to 48 months (through April 1, 2025). - Augmentation of access amounting to 75 percent of quota (SDR407.1 million) over the extended program duration for balance of payments support. - Approved modification of program conditionalities, waivers of nonobservance of the continuous performance criteria on accumulation of external arrears and end-June 2023 tax revenue target, and waiver of applicability for all other end-June 2023 and continuous quantitative performance criteria. ### Resilience and Sustainability Facility (RSF) arrangement - Approved RSF arrangement amount: SDR407.1 million (75 percent of quota; about US$551.4 million). - RSF duration: will coincide with the period remaining under the EFF/ECF arrangements, as extended. - RSF objectives: - Build resilience to climate change and catalyze further private climate financing. - Integrate climate-related considerations in macro policies and frameworks by adopting green public financial management and climate-sensitive public investment management reforms. - Introduce carbon pricing. - Enhance effectiveness of Kenya’s existing frameworks to mobilize climate finance. - Strengthen disaster risk reduction and management. ### Program priorities and policy mix - Key policy priorities: - Reducing debt vulnerabilities through multi-year fiscal consolidation. - Raising tax revenues and rationalizing spending while protecting priority social and developmental spending. - Maintaining a proactive monetary policy stance as part of a mutually reinforcing prudent set of policies. - Fiscal governance and structural reforms to sustain momentum: - Strengthen public financial management systems. - Manage fiscal risks from state-owned enterprises by enhancing their governance and oversight. - Enhance the anti-corruption framework. - Address shortcomings in the AML/CFT framework. - Ensure effective expenditure audits for transparency and accountability. - Monetary policy and reserves: - Central Bank of Kenya (CBK) commitment to a data dependent policy stance to keep inflation expectations anchored. - CBK should continue steps to strengthen its reserves position and deepen the FX market, while allowing exchange rate flexibility as a shock absorber. - Contingency planning: - Recent challenges in resource mobilization and elevated uncertainty call for contingency plans that can be quickly deployed to ringfence fiscal performance. - Tighter financing conditions require a prudent debt policy and continued efforts to prioritize concessional loans. ### Executive Board assessment (high-level) - Kenya's economy has been resilient despite the worst drought in many decades and a difficult external environment. - ECF and EFF arrangements support efforts to address emerging challenges to sustain macroeconomic stability, market confidence, and promote growth while safeguarding resources for vulnerable groups and developmental needs. - While the medium-term outlook remains positive, near-term global headwinds and elevated inflationary pressures affect economic activity. - Reforms under the RSF program are expected to advance Kenya’s track-record at addressing climate-related challenges and to incorporate climate risks into fiscal planning and the investment framework. ### Key economic indicators (Table 1. Kenya: Selected Economic Indicators, 2021—2026) - Output - Real GDP growth (%): 2021 Act. 7.6; 2022 4.8; 2023 Proj. 5.0; 2024 5.3; 2025 5.4; 2026 5.4 - Prices - Inflation – average (in %): 2021 Act. 6.1; 2022 7.8; 2023 Proj. 6.6 - Central government finances (fiscal year)1 - Total revenue (% GDP): 2021 Act. 16.1; 2022 17.6; 2023 Proj. 17.7; 2024 18.3; 2025 17.9; 2026 17.9 - Expenditure and net lending (% GDP): 2021 Act. 24.4; 2022 23.8; 2023 Proj. 23.6; 2024 22.6; 2025 22.3; 2026 21.2 - Overall fiscal balance (% GDP): 2021 Act. –8.3; 2022 –6.2; 2023 Proj. –6.0; 2024 –4.3; 2025 –4.0; 2026 –3.3 - Public debt - Gross nominal debt (% GDP): 2021 Act. 68.2; 2022 68.4; 2023 Proj. 70.6; 2024 68.5; 2025 66.9; 2026 65.2 - Gross external debt (% GDP): 2021 Act. 34.7; 2022 34.5; 2023 Proj. 37.9; 2024 37.8; 2025 36.7; 2026 35.5 - Money and Credit - Broad money (% change): 2021 Act. 7.1; 2022 7.5; 2023 Proj. 9.5; 2024 10.3; 2025 11.1 - Credit to private sector (% change): 2021 Act. 8.6; 2022 12.5; 2023 Proj. 12.1; 2024 12.8; 2025 12.4 - Policy rate, end-of-period (%): 2021 Act. 7.0; 2022 8.75; 2023 Proj. … - Balance of payments - Current account balance (% GDP): 2021 Act. –5.2; 2022 –5.1; 2023 Proj. –4.8; 2024 –5.0 - Gross international reserves (in months of imports): 2021 Act. 4.7; 2022 3.9; 2023 Proj. 3.3; 2024 3.5; 2025 3.7; 2026 3.8 - Exchange rate - REER (% change; positive = appreciation): 2021 Act. –2.6; 2022 2.2 1 Based on fiscal year (i.e., 2023 represents fiscal year 2022/23). *IMF Executive Board press release, July 17, 2023.* --- ## 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) - [PRESS CENTER](http://presscenter.imf.org/) - [Kenya and the IMF](http://www.imf.org/external/country/KEN/index.htm) - [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries) - [Press Releases](https://www.imf.org/en/news/searchnews) - [Extended Fund Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility) - [Extended Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/56/Extended-Fund-Facility) - [Resilience and Sustainability Facility](https://www.imf.org/en/About/Factsheets/Sheets/2023/Resilience-Sustainability-Facility-RSF) - [21/98](https://www.imf.org/en/News/Articles/2021/04/02/pr2198-kenya-imf-executive-board-approves-us-billion-ecf-and-eff-arrangements) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2023/07/17/pr23265-kenya-imf-executive-board-completed-fifth-reviews-eff-ecf-approves-rsf_