Kenyan loans sourced from the International Monetary Fund (IMF) have experienced a threefold increase, surging to Sh335.5 billion as of June this year from Sh111.3 billion in January 2021.
This substantial rise is indicative of the impact of Kenya's multi-year credit facility established with the multilateral lender.
The escalation in IMF funding is aligned with Kenya's 48-month arrangement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) agreements initiated in February 2021.
The Treasury's data reveals that the share of IMF funding concerning total multilateral loans has expanded from 7.39 per cent to 12.64 per cent during this period.
Anticipating further disbursements, IMF staff is currently engaged in the sixth review mission in Kenya.
The outcome of this review, expected later this month, will pave the way for additional fund disbursements in December.
The delegation has engaged with President William Ruto, Treasury officials, and Central Bank of Kenya (CBK) Governor Kamau Thugge in preparation for a staff-level agreement.
In the last review, the IMF allocated Sh63 billion ($415.4 million), including Sh16.7 billion ($110.3 million) through an augmentation of access.
Additionally, the IMF Executive Board sanctioned a 20-month Resilience and Sustainability Facility arrangement amounting to Sh83.7 billion ($551.4 million).
This allocation aims to bolster Kenya's resilience to climate change and stimulate private climate financing.
Furthermore, the board extended the EFF/ECF arrangements from 38 to 48 months, extending until April 1, 2025.
This extension provides ample time for the implementation of the authorities' reform agenda.
The IMF underscored Kenya's economic resilience, acknowledging its response to fiscal consolidation and revenue growth amid challenges.
IMF Deputy Managing Director Antoinette Sayeh remarked, "Kenya’s economy has been resilient despite the worst drought in many decades and a difficult external environment."
She emphasized that the EFF and ECF arrangements continue to support the authorities' efforts to maintain macroeconomic stability, promote growth, and advance ongoing reforms.
The approvals coincide with the IMF's recognition of Kenya's steps, including the approval of the financial year 2023/24 budget and the 2023 Finance Act.
These are considered pivotal measures supporting ongoing consolidation efforts to reduce debt vulnerabilities while safeguarding social and development expenditures.
Despite the surge in IMF borrowings, the World Bank remains the primary source of multilateral loans for Kenya.
The IMF expects Kenya's economy to grow by five per cent this year, up from 4.8 per cent in 2022, with inflation projected to stabilize within the government's upper limit of 7.5 per cent in the medium term.