IMF Executive Board Completes Fourth Reviews of EFF and ECF Arrangements for Kenya Providing a US$447.39 million Disbursement

  • The IMF Executive Board completed the Fourth reviews of the EFF/ECF arrangements with Kenya, providing the country with access to SDR336.54 million (about US$447.39 million). This includes an SDR162.34 million (US$215.81 million) augmentation of access.
  • Global developments have contributed to rising inflation and slowing growth, but the economy remains resilient amid a continuing severe drought in some regions.
  • With strong commitment to the Fund-supported program, Kenya is making progress in addressing debt vulnerabilities and promoting more inclusive growth.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) [today] completed the Fourth reviews of the 38-month arrangements under theExtended Credit Facility(ECF) and theExtended Fund Facility(EFF) arrangements. The Board’s decision enables immediate disbursement of SDR336.54 million (about US$447.39 million) usable for budget support, including an augmentation under the ECF arrangement of SDR162.34 million (30 percent of quota, about US$215.81 million). This brings Kenya’s cumulative disbursements under the EFF/ECF arrangements to about US$1.655.59 million. With the augmentation, the total amount under the EFF/ECF arrangements rises to SDR 1.818 billion (335 percent of quota or about US$2.416 billion).

The EFF/ECF arrangements (approved on April 2, 2021, see Press Release21/98), aim to support Kenya’s program to address debt vulnerabilities, the authorities’ response to the COVID-19 pandemic and global shocks, and to enhance governance and broader economic reforms.

Kenya’s economy remains resilient against a challenging global backdrop and is projected to grow 5.3 percent in 2022. Inflation moved above the Central Bank of Kenya’s (CBK) target band in June and is expected to peak in early 2023. Despite double-digit export growth, the current account is expected to widen on higher global oil prices in 2022. Downside risks predominate in the near term, while Kenya’s medium-term outlook remains favorable although climate-related risks are elevated.

With progress on fiscal consolidation, public debt has begun leveling off. Taxes performed strongly in FY2021/22, while spending was compressed on shortfalls in external commercial financing, leading to an overperformance of 1.7 percent of GDP in the primary deficit. However, obligations carried over from last fiscal year and an increase in unbudgeted spending in early FY2022/23 increased pressures on the budget. The new administration of President Ruto has reasserted Kenya’s commitment to fiscal consolidation, targeting a lower overall fiscal deficit than the original budget.

The CBK has raised policy rates by a cumulative 175 basis points in 2022. The Kenyan Shilling continued to depreciate against the U.S. dollar while the dollar strengthened globally, and liquidity has declined in the interbank forex market. A lower projected path of FX reserves reflects financing shortfalls last fiscal year and planned cuts in foreign-financed projects during FY2022/23. Reserves remain adequate at 3 months of imports, gradually increasing over the medium term.

Kenya’s structural reform agenda is advancing, albeit with some delays. In the areas of governance and transparency, the authorities have now completed and published audits of COVID-19 vaccine spending and begun publishing beneficial ownership information of successful bidders in new procurements. However, progress on addressing financial weaknesses in state-owned enterprises and a planned review of the fuel pricing mechanism were delayed during the political transition.

At the conclusion of the Executive Board’s discussion, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:

“Kenya’s commitment to its economic program supported by the Fund’s Extended Fund Facility and the Extended Credit Facility arrangements is anchoring debt sustainability. The economy has performed well amid slowing global growth, tighter financing conditions and volatile commodity prices, while the continuing drought has increased food insecurity, and climate-related risks pose ongoing challenges. Mutually reinforcing prudent macroeconomic policies and resolute implementation of structural reforms remain essential to safeguard positive medium-term prospects.

“Strong performance of tax revenues supported resilience and cushioned the initial impact of global shocks on households and businesses, and the new administration’s elimination of petrol subsidies and plans for significant reprioritization of expenditure to keep the fiscal deficit below the budgeted level are commendable. Looking ahead, continued strong commitment to fiscal consolidation over the medium term remains key to reduce debt vulnerabilities. Additional tax policy measures, anchored in a Medium-Term Revenue Strategy to secure space for needed social and development spending, and improved spending efficiency, revenue administration, and public financial and debt management will be key.

“The Central Bank of Kenya’s (CBK) monetary policy stance is welcome. Further tightening would limit second-round effects and keep inflationary expectations well-anchored while supporting external adjustment. The exchange rate should function as a shock absorber, supported by a well-functioning interbank FX market, with forex interventions (sales) limited to addressing excessive volatility. Continued monitoring of the banking system is also important.

“Alongside new initiatives to promote inclusive growth, progress on the structural reform agenda should continue. By beginning to publish beneficial ownership information for successful bidders of new procurements, Kenya delivers on a key commitment to enhance transparency and accountability. However, the AML/CFT legal framework needs strengthening and stepped-up efforts on compliance. Addressing vulnerabilities at Kenya Airways and Kenya Power and Lighting Company is urgent, along with strengthening the governance framework for state-owned corporations. Planned reviews of the fuel pricing mechanism and the audit of extrabudgetary spending are also important. High vulnerability to climate change calls for multi-faceted policy action.”

Kenya: Selected Economic Indicators, 2021—2024










Real GDP growth (%)






Inflation – average (%)





Central government finances

(fiscal year)1

Revenue (% GDP)





Expenditure (% GDP)





Fiscal balance (% GDP)





Public debt (% GDP)





External debt (% GDP)





Money and Credit

Broad money (% change)





Credit to private sector (% change)





Policy rate, end of period (%)


Balance of payments

Current account (% GDP)





Reserves (in months of imports)





Exchange rate

REER (% change)


Source: Kenyan authorities and IMF staff estimates and projections. 1 Based on fiscal year (i.e., 2023 represents 2022/23, ending in June 2023).
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