Kenya has requested for a six month extension to the $1.5 billion IMF standby facility that is due to expire next week pending a completion of scheduled reviews of the programme, the Bretton Woods institution has said.
An IMF review team has been in the country for the past three weeks, conducting the 2018 Article IV consultation and holding discussions on continued IMF support to Kenya with senior officials from the Treasury, Central Bank, MPs, civil society members and the private sector. They also met President Uhuru Kenyatta.
The IMF had suspended access to the two year facility last June, after failing to complete a scheduled review, although this fact only came to light last month.
“The authorities requested a six-month extension of the month Stand-By Arrangement (SBA) that expires on March 13, 2018 to allow more time to complete the outstanding reviews of the IMF-supported programme,” said the IMF staff team leader Benedict Clements in a statement on Wednesday.
“The SBA extension will be presented to the executive board before its expiration on March 13, and outstanding program reviews could be completed by September 2018.”
The facility acts as insurance for the country in case of external shocks, especially those affecting balance of payments.
Discussions on the extension and the possibility of a new facility beyond September centred around the large fiscal deficit and the need to review the rate cap on bank loans, which the IMF has opposed.
Kenya is also likely to come under pressure to curb her borrowing appetite, with the IMF having expressed concern about the rate at which public debt is growing.