The International Monetary Fund (IMF) has approved the disbursement of US$739 million (Ksh78.3 billion) to help Kenya fight Coronavirus. The funding will be drawn from the Rapid Credit Facility (RCF), the Washington based lender said on Thursday.
According to IMF, This will help to meet Kenya’s urgent balance of payments need stemming from the outbreak of the COVID-19 pandemic.
Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge had on March 24 hinted that the government was engaging lenders for support as the country tries to navigate the devastating effects of the pandemic on Kenya’s economy.
“The impact of COVID-19 on the Kenyan economy will be severe. It will act through both global and domestic channels, and downside risks remain large. While the authorities have taken decisive action to respond to the pandemic’s health and economic impacts, the sudden shock has left Kenya with significant fiscal and external financing needs. Authorities have committed to resume their fiscal consolidation plans once the crisis abates to reduce debt vulnerabilities,” the lender said in a statement.
According to the IMF, the facility will allow Kenya to maintain an adequate level of international reserves and help provide the budget financing needed to respond to the pandemic.
The Executive Board of the IMF said it is in close contact with the Kenyan government and stands ready to provide policy advice and further support.
“The COVID-19 pandemic has delivered a large economic shock to Kenya. The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs,” said Tao Zhang, IMF Deputy Managing Director and Acting Chair.
“Emergency financing under the RCF will deliver liquidity support to help Kenya cover its balance of payments gap this year. It will provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis. It will also catalyze necessary financing from other donors.
Further the lender said that a pause in the government’s plans to re-align its budget in the wake of the pandemic is “appropriate’.
“These measures should be temporary and well-targeted. Once the crisis abates, it is critical that the authorities resume their pursuit of a growth-friendly medium-term fiscal adjustment, including raising revenues as a share of GDP, to reduce debt vulnerabilities,” added the lender.
The IMF which is known to be very diplomatic in its communication further justified the funding saying the Kenyan government will conduct independent post-crisis auditing of COVID-19 related expenditures and publish the results.
President Uhuru Kenyatta hinted at the same in his speech during labour day celebrations last week, albeit in a torrent of rage amid criticism and suspicion that the government was looting funds meant to cushion the public from the effects of the virus.
“All money that will be used during this period will be accounted for after we overcome this challenge,” said President Kenyatta.
The back and forth between the president and his critics came was triggered by reports of the government’s extravagant use of Ksh1.3 billion sourced from the World Bank.
Documents tabled before parliament smacked of theft with accounts showing that some Ksh 42 million was used to lease ambulances while another Ksh4 million used to provide tea and snacks.
Health Cabinet Secretary Susan Mochache, however, came out later to say that no dime from the money received from World Bank had been spent by the time she was issuing her rejoinder.