IMF warns Kenya of new borrowing as gov't eyes Ksh.194B loan from UAE

According to IMF Director of Communication Julie Kozack, Kenya has a high debt distress risk and taking the $1.5 billion (Ksh.194 billion) will further crunch the nation's monetary reserves.

She however maintained that the IMF will not comment on the specific discussions that Kenya is having with its bilateral creditors, maintaining that ;

"We assess Kenya to have a high risk of debt distress, any new borrowing should be considered within the context of a comprehensive fiscal strategy to reduce debt vulnerabilities while also addressing the recent and emerging fiscal challenges," she noted.

Kozack further noted that policymakers in Kenya face a complex balancing act between boosting domestic revenues and addressing the pressing spending needs for priority areas, including social programs, health and education, managing the rising public debt and boosting domestic revenues.

Her sentiments lie on the backdrop of a loan approved to Kenya in October as IMF's executive board approved a request by Kenya's government to access a Ksh.78 billion loan in an effort to rebuild its fiscal policies. 

The review came after the IMF concluded a meeting in determining the seventh and eighth reviews; a process that was disrupted in early June during the anti-government protests. 

Following the meeting, the IMF exuded confidence that the funds would address Kenya's challenge in reviving the country's economic status. 

IMF currently has three programs with Kenya; Extended Fund Facility (EFF), Extended Credit Facility (ECF) arrangement and Resilience and Sustainability Facility (RSF) programs. 

EFF and ECF provide financial assistance to countries facing problems in reducing inflation levels while RSF are funds that support a country's climate agenda. 

The approval of the three programmes has allowed a disbursement of $606 million (Ksh.78.4 billion) and brought total disbursements to about $3.1 billion (Ksh.401 billion) under the programs.