IMF: Why we gave Kenya Sh255 billion loan

By Joel Muinde On Tue, 6 Apr, 2021 21:47 | 2 mins read
Ms. Antoinette Sayeh
Ms. Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair of the Executive Chair at a past function. Dr. Sayeh noted that Kenya government's program charts a clear path to reduce debt-related risks. It will bring the primary balance below its debt-stabilizing level during the EFF/ECF arrangements and restore tax revenue––which had been falling even before the COVID-19 shock––back to levels achieved in recent years. PHOTO | CHRISTINE LAGARDE | IMF

Kenyans on social media have not rested since the disclosure that the International Monetary Fund (IMF) advanced Kenya a Sh255 billion loan.

On Tuesday, April 6, social media users decided trending several hashtags and pushing a petition seeking a cancellation of the loan was not enough. They went a step further to troll the IMF on social media by posting thousands of comments, seeking the lending giant’s attention, but to no avail.

While the Kenyan government and the IMF have remained studiously silent waiting for the furor to die down, as all social media noise by Kenyans does, the IMF statement issued on April 2, on why it offered the loan to Kenya seems but a robust defense of the multibillion loan.

Without resorting to the high-falutin language employed by the IMF in its statement, below are the simple reasons the IMF advanced for lending Kenya yet another multi-billion loan.

First, the loan approved is under two programs, the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and its for an amount about US$2.34 billion (KSh255 billion). In IMF terminology, it is called an ECF/EEF.

Second, its approval triggered an immediate disbursement of US$307.5 million (roughly Ksh33 billion), for budget support.

Third, IMF said the loan is a continuation of another loan given in May 2020, equivalent to US$739 million (roughly Ksh80 billion).

The new loan is to serve the following purposes: reduce debt vulnerabilities through several channels such as raising tax revenues, controlling spending and protecting vulnerable groups, addressing weaknesses in state-owned enterprises and strengthening the anti-corruption framework.

While that sounds like a mouthful, it is just but part of the reasons the Kenyan government — represented by senior officials including Treasury CS, PS, CBK governorn and deputy governor, Head of Public Service among others — presented to the IMF as the basis for request for the extension of the ECF/EEF.

To address some of the biggest criticisms levelled against President Uhuru Kenyatta’s public debt policy, the IMF assuringly noted that the country’s debt level is sustainable but with a caveat, that “it is it a high risk of debt distress.”

Debt distress is the recurring theme of the majority of comments posted by Kenyans on nearly every post by the IMF on social media today.

Perhaps an explanation to Kenyans by the Presidency and its top economic policy advisers, using layman terms, on what the loan will fund can go a long way towards calming fears legitimately expressed by a cross-section of Kenyans.

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