Kenya to receive IMF’s standby credit facility by July

The Kenyan government is in the final stages of discussions with the IMF to receive a standby loan facility by the end of July 2019. The International Monetary Fund has relaxed its demands and no longer requires the repeal of the lending rate cap law before it issues the new credit facility.

IMF issued Kenya a KSh150 billion precautionary loan facility in March 2016. The two-year standby agreement expired in March 2018 and was extended up to September 2018. IMF withdrew the cautionary service in September after Kenya failed to meet the set requirements including removing the interest rate cap.

The National Treasury Cabinet Secretary Mr. Henry Rotich has revealed that the global financing institution will issue a standby loan similar to the previous one in two months.

“We are looking at a similar arrangement as we had before,” the CS told Reuters.

The top official at Treasury stated that Kenyan legislators are reviewing the lending rate cap law introduced in September 2016. Since the law came into effect, lending to the small and medium-sized businesses has substantially declined. Discussions to amend or remove the legislation are ongoing.

Mr. Henry Rotich told Reuters that he aims to bring down the debt servicing costs, which currently stand at 20 per cent to a lower level of between 12 and 16 per cent. The CS said that issuing additional Eurobond is one of the options available for raising the much-needed funds.