KENYA CONSIDERS A Credit Plan with IMF: What you should know, an impact on the economy

• The administration of President William Ruto and the International Monetary Fund (IMF) agreed
• Kenya was scheduled to receive a total of KSh 110.04 billion from the plan expected to be completed by April 2025
• According to renowned Kenyan economist Churchill Ogutu, the decision to terminate the program may be linked to the lack of government -based structural criteria

Presidential Administration William Ruto You missed approximately KSh 110.04 billion after canceling the ninth review of the International Monetary Fund (IMF).

How much was Kenya to receive from the IMF?

Kenya and the IMF unanimously agreed to cancel the program which would provide $ 490 million (KSh 63.4 billion) for the Treasury Added Treasury (EFF) and Credit Assistance (ECF).

The program, which was ink in April 2021 and is expected to be completed in April 2025, was also scheduled to provide $ 360.9 million (KSh 46.7 million) in funding from Rapid Support Facility on the weather.

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The government took the decision despite financial challenges including revenue mobilization, debt tolerance and borrowing pressure, preparing a new plan from the Bretton Woods Institute.

What is the meaning of terminating the IMF program

In an exclusive interview with TUKO.co.ke, renowned Kenyan economist Churchill Ogutu explained that Kenya and the IMF would choose to terminate the activity for several reasons:

Objectives missed

Ogutu noted that the IMF imposed structural terms and conditions for the Kenyan government, whose implementation has been delayed.

He noted that the IMF is monitoring development closer to financial goals that inform its fundraising style.

“It is not surprising that the ninth review could not be completed. Basically the IMF inspects and monitors progress in financial goals as well as structural criteria. Financial goals such as achieving revenue goals, Kenya has missed.

“Structural criteria are the evolution that Kenya had to set, but in that regard, Kenya is too late to implement it. So that is the history of the review that would basically challenge and now it makes sense to set it aside,” Said Ogutu.

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No financial shock

Ogutu cited the 2025 National Treasury Budget Statement, which prevented that there was no further funding from the IMF in the next financial year.

This is because there was no instant shock as it was in April 2021 when the government entered the current plan.

Should Kenya set a new contract with the IMF?

Kenyan lawyers said they would sign another agreement with the IMF.

Kenyan authorities claimed it was time to enter into a new funding program with an international lender.

The economist questioned that the country could sign another agreement with the IMF, but described it as a 'cautionary plan.'

“The heir plan can take a variety of varieties; the financial, unspecified or cautious one. It is to wait and see the actions that the government will take,” He explained.

He added that there is still a window for the country to get some funding in the next program.

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Source: TUKO.co.ke