IMF approves $1.5bn standby support for Kenyan PFM reform

15 Mar 16

The International Monetary Fund has approved a new $1.5bn package for Kenya that can be drawn down by the country to support planned public financial management reforms.

The fund’s executive board completed the second and final reviews of two previous support schemes for Kenya yesterday.

Following this, the fund decided to expand the available support through two funding streams – a standby arrangement and a standby credit facility – from about $688m to $1.5bn.

This money will be used by the country to implement reforms if there are external economic shock that could undermine reforms plans, but Kenyan authorities told the IMF it would continue to view the funds as precautionary.

Min Zhu, the IMF’s deputy managing director and acting chair, said the country’s recent growth performance was robust and its outlook remained positive.

“Despite positive policy steps undertaken under the current fund-supported programme, the economy remains vulnerable to shocks, reflecting less favourable global financial market conditions, as well as continued security threats and potential extreme weather events.”

Zhu added that these precautionary arrangements would to both anchor ongoing economic and institutional reforms and mitigate the impact of potential external shocks.

The planned reduction in Kenya’s deficit by 3% of gross domestic product over the next two years maintained space for infrastructure investments and improved provision of health and education services, he added.

“Continued public financial management reforms – aimed at upgrading efficiency, transparency and accountability, to complement the envisaged fiscal consolidation – ­are key to containing risks,” Zhu said.

  • Richard Johnstone

    Richard Johnstone is the senior reporter on Cooking Recipes magazine and publicfinance.co.uk. He tweets

     

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