IMF bails out Kenya with $209m loan
May 31, 2009
WASHINGTON - The International Monetary Fund on Friday approved a $209m loan for Kenya to help the country fill a financing gap caused by a fall in global demand and the impact of higher food and fertilizer costs.
WASHINGTON - The International Monetary Fund on Friday approved a $209m loan for Kenya to help the country fill a financing gap caused by a fall in global demand and the impact of higher food and fertilizer costs.
The IMF said the loan under the Fund’s Exogenous Shocks Facility will also aid the country's push to secure funding from donor countries.
“Fund support will enable Kenya to close its financing gap while improving the prospects for additional donor support,†IMF First Deputy Managing Director John Lipsky said in a statement.
The Fund estimated the adverse effects from the global slowdown and higher food prices on Kenya’s balance of payments was $1.4 to $2.2b over the 2008/09 and 2009/10 fiscal years.
It said economic growth in the East African country was set to decline to 3% this year from a 6% average from 2004 to 2007.
Kenya doubled its loan request to the IMF to $200m to cushion its currency against the fallouts from the global downturn and a severe drought at home, the fund’s representative said on Thursday.
Scott Rogers said the Kenya had revised its borrowing after the IMF changed its rules to allow countries to access more funds in the face of the global slump.
Previously, the IMF’s Exogenous Shocks Facility -- the programme under which Kenya is borrowing -- only gave nations access to 25% of its allocated borrowing quota with the fund.
Kenya had asked for its entire entitlement of $100m before the IMF adjusted the rules.
“They could have said, we will stick with $100m but they would rather have the money,†Rogers said.
Kenya’s balance of payments swung into a deficit of $677m in the year to March from a surplus of $747m on the same period a year earlier.
Hard currency reserves also fell well below the statutory minimum of four months worth of import cover, thanks to high prices last year for commodities including oil, increased food imports and capital flight caused by the credit crunch. Rogers said the IMF board would meet on Friday to weigh the loan application, adding it was likely to be approved.
“Usually when we get to this stage, the board very rarely, will not approve it. The chances are very good but, as they say, it is not over until it is over,†he said. Government expects a modest recovery in economic growth this year to between 2-3% after post-election violence.
Reuters
The IMF said the loan under the Fund’s Exogenous Shocks Facility will also aid the country's push to secure funding from donor countries.
“Fund support will enable Kenya to close its financing gap while improving the prospects for additional donor support,†IMF First Deputy Managing Director John Lipsky said in a statement.
The Fund estimated the adverse effects from the global slowdown and higher food prices on Kenya’s balance of payments was $1.4 to $2.2b over the 2008/09 and 2009/10 fiscal years.
It said economic growth in the East African country was set to decline to 3% this year from a 6% average from 2004 to 2007.
Kenya doubled its loan request to the IMF to $200m to cushion its currency against the fallouts from the global downturn and a severe drought at home, the fund’s representative said on Thursday.
Scott Rogers said the Kenya had revised its borrowing after the IMF changed its rules to allow countries to access more funds in the face of the global slump.
Previously, the IMF’s Exogenous Shocks Facility -- the programme under which Kenya is borrowing -- only gave nations access to 25% of its allocated borrowing quota with the fund.
Kenya had asked for its entire entitlement of $100m before the IMF adjusted the rules.
“They could have said, we will stick with $100m but they would rather have the money,†Rogers said.
Kenya’s balance of payments swung into a deficit of $677m in the year to March from a surplus of $747m on the same period a year earlier.
Hard currency reserves also fell well below the statutory minimum of four months worth of import cover, thanks to high prices last year for commodities including oil, increased food imports and capital flight caused by the credit crunch. Rogers said the IMF board would meet on Friday to weigh the loan application, adding it was likely to be approved.
“Usually when we get to this stage, the board very rarely, will not approve it. The chances are very good but, as they say, it is not over until it is over,†he said. Government expects a modest recovery in economic growth this year to between 2-3% after post-election violence.
Reuters