IMF Board Approves $750 Million Precautionary Program for Kenya

By Matina Stevis
Tuesday, February 3, 2015

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NAIROBI—The International Monetary Fund board on Monday approved a request by the government of Kenya for a precautionary program of about $750 million, said the fund’s resident representative in Kenya, Armando Morales.

The Kenyan government had requested the program as an insurance policy again economic shocks, despite having successfully borrowed in the international capital markets in 2014 in its first dollar-denominated bond.

The finance ministry, which filed the request for the loan, already has told the IMF that it doesn’t intend to use it but wants the funds to be available as a cushion against weather- or security-related threats to the country’s economy.

Al Qaeda linked Somali militant group al-Shabaab has been staging attacks in Kenya in recent years, leading to Western nations warning their citizens off the country’s idyllic Indian Ocean coastal resorts. Tourism, an important contributor to the country’s economy, has taken a hit as a result.

Kenya is considered East Africa’s economic powerhouse, having grown by more than 5% in 2014 according to the IMF, and seen as growing faster yet in the coming years.

Despite the fact that it may never tap the IMF lending approved Monday, Kenya will have to comply with detailed conditions set out by fund officials. The loan will be available to Kenya for 12 months.

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