Kenya has reached out to the International Monetary Fund (IMF) for support to weather the coronavirus economic hardships. This is the second time in six months that the state has done that.
According to IMF resident representative, Tobias Rasmussen, the Kenyan government had asked the Brettonwoods institution for another loan following the Ksh 79.3 billion received in May that Kenya sought to help it respond to the economic shocks caused by the pandemic.
This has shown the country’s deteriorating cash-flow situation that is marked by falling revenues and worsening debt service obligations.
The type of credit Kenya has sought from the IMF is a quick-disbursing facility where money flows straight into the budget to top up the public purse and is used at the discretion of the government.
Kenya had kept away from this type of credit during former President Mwai Kibaki’s with most of the support from institutions like the IMF and the World Bank coming in the form of project support.
“Following up on the support provided by the IMF in May under our Rapid Credit Facility (RCF), the Kenyan authorities have expressed interest in a Fund arrangement. IMF staff is in discussions with the authorities toward such an arrangement,” Mr Rasmussen said as quoted by Business Daily.
Kenya is asking for a further loan amid a spike in Covid-19 cases that has seen infections jump 45% to 56,601 over the past month and deaths 42% to 1, 027. This could trigger fresh restrictions from the government, risking reducing economic activity and denying the Kenya Revenue Authority (KRA) opportunities to grow tax collection.
Kenya’s economy shrank by 5.7% in the second three months of 2020, its first quarterly contraction since the global financial crisis 12 years ago, as the Covid-19 pandemic shut businesses and kept people at home.
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