In an interview with Reuters, Kenya’s Finance Minister, Henry Rotich said Kenya’s stand-by loan deal with the International Monetary Fund (IMF) has expired. He however noted that the country will continue talking to the Fund to discuss funding facilities it can access in the future.
A six month extension was secured in March 2018, for the $989.9 million arrangement agreed in 2016 to help cushion the economy, in case of unforeseen circumstances that could upset the balance of payment. The deal included a stand-by credit facility of $494.9 million which expired in March 2018, but no funds were taken out.
Rotich noted that the expiration was not unusual, since Kenya had participated in many of those programmes over the past 15 years. He said “there is nothing unique about any programme ending. I think what’s important is we did have a very successful two year programme, which is now comping to an end”.
The Central Bank was forced to intervene through the sale of dollars to banks in the afternoon, when the shilling weakened by 0.3 percent after news of expiration of the facility with IMF was released.
Rotich said it was better for Kenya to wean itself off support from the IMF. He revealed that “as a country that is entering into the medium and developed countries, we should be relying less and less on IMF facilities, especially if you have come of age in our macroeconomic management”.
The Finance Minister however added “but we can still engage and get back to it if we feel it is necessary. We will continue to engage with the Fund going forward, the way we have done in the past”.
The Principal Secretary to the Minister of Finance, Kamau Thugge, said at a budget meeting that not having an IMF precautionary arrangement would not hurt the economy, which is expected to grow 6.2 percent in 2019, up from a forecast of 6.0 percent for 2018.