Sayeh said IMF is welcoming Central Bank of Kenya’s (CBK) recent monetary policy tightening…reports Asian Lite News
The International Monetary Fund (IMF) has approved a 235.6 million U.S. dollars loan to Kenya.
The IMF said in a statement dated Monday that the funding is part of a 2.34 billion U.S. dollars extended credit facility (ECF) and extended fund facility (EFF) that was agreed to by the IMF in April 2021 to support Kenya’s program to address debt vulnerabilities, response to the COVID-19 pandemic and global shocks resulting from the conflict in Ukraine, as well as to improve governance and support broader economic reforms.
“Kenya’s economy has rebounded strongly in a challenging environment and is projected to grow 5.7 percent in 2022,” said IMF in the statement.
It also added that inflation moved above the Central Bank of Kenya’s (CBK) official target band of 2.5 percent to 7.5 percent in June and is expected to peak this year before easing back within the band in early 2023.
“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, adding that Kenya’s medium-term outlook still remains favourable.
“Kenya’s economic program supported by the Fund’s Extended Fund Facility and the Extended Credit Facility arrangements is providing an essential policy anchor to debt sustainability and public confidence,” said Antoinette Sayeh, Deputy Managing Director and Acting Chair of IMF.
“Despite the resilient economic recovery, the program remains subject to downside risks, including from deeper disruptions from the war in Ukraine, unsettled global market conditions, and an increase of food insecurity.”
Sayeh said IMF is welcoming Central Bank of Kenya’s (CBK) recent monetary policy tightening.
“The CBK should stand ready to continue to adjust its stance to limit second-round effects from higher food and fuel prices and to keep inflation expectations well-anchored amid a temporary increase of inflation above the target band.”
She stressed that maintaining the momentum in the authorities’ structural reform agenda is critical.
“Building on the ongoing efforts to improve the oversight of state-owned enterprises, it is essential to advance the restructuring of Kenya Airways and restore the long-term viability of Kenya Power and Lighting Company,” she said.
Further improvements in the anti-corruption framework and the AML/CFT agenda as well as an effective follow-up of expenditure audits are needed to enhance transparency and accountability,” she added.