Kenya Receives Sh78.4 Billion in Covid-19 Emergency Relief Funds from IMF

The International Monetary Fund (IMF) has approved Sh 78.4b interest-free loan in emergency financing to help Kenya respond to the economic shock caused by the novel coronavirus pandemic.

“Emergency financing under the RCF (Rapid Credit Facility) will deliver liquidity support to help Kenya cover its balance of payments gap this year,” said Mr. Tao Zhang, IMF’s Deputy Managing Director and Acting Chair in a statement on Wednesday. “It will provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis.” He added.

The loan will have a grace period of five and a half years and will mature in 10 years according to the IMF concessional lending terms.

Further to the loan, IMF’s executive board also said it was in close contact with Kenyan authorities and is ready to provide policy advice and further support, as needed.

Treasury CS, Ukur Yatani noted in a tweet that the “support will enable National Treasury to address gaps in our budget implementation,”

The Kenyan Treasury forecasts a decline in 2020 economic growth to 2.5% but may fall to 1.8%. This is a great decline resulting from the pandemic compared with 5.4% growth recorded in 2019.

However, IMF forecasts a growth of 1.0% this year for the East African country.

“The impact of COVID-19 on the Kenyan economy will be severe. It will act through both global and domestic channels, and downside risks remain large,” the IMF statement added noting that the pandemic has resulted into a sudden shock “has left Kenya with significant fiscal and external financing needs.”