By David Lawder
WASHINGTON -The International Monetary Fund said its executive board approved a $235.6 million disbursement to Kenya on Monday as it approved a third review of the country’s Extended Credit Facility and Extended Fund Facility arrangements.
The disbursement is usable for budget support and brings such payouts to $1.208 billion under the 38-month arrangements, which were worth $2.34 billion when they were approved in April 2021, the IMF said.
“Kenya’s economy has rebounded strongly in a challenging environment and is projected to grow 5.7% in 2022,” the IMF said in a statement, adding that inflation, which hit 7.5% in June, was likely to peak this year before easing back to the Central Bank of Kenya’s 2.5% target by early 2023.
“Downside risks predominate in the near-term. Uncertainties stem from the war in Ukraine, continuing drought in the semi-arid regions, unsettled global financial market conditions and the political calendar,” the IMF said. “But Kenya’s medium-term outlook remains favorable.”
The IMF said that Kenya showed “very strong” performance in tax collections during the 2021/22 fiscal year, which has created fiscal space to temporarily cushion part of the higher fuel and food costs that have hit households while still meeting the program’s fiscal targets.
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“The approved fiscal year 2022/23 budget broadens tax collection and maintains careful expenditure control while protecting social spending,” the IMF said.
(Reporting by David Lawder; Editing by Sandra Maler and Sam Holmes)
