Kenya plans over $ 900 million in World Bank and IMF loans for economic recovery
Kenya expects to receive over 100 billion shillings in loans from the World Bank (WB) and the International Monetary Fund (IMF) in early June, even as the country seeks more debt suspension in its plan economic stimulus.
The Central Bank of Kenya (CBK) said on Thursday that disbursement of 75 billion shillings ($ 750 million) from the WB was expected in about two weeks, while another 41 billion shillings (410 million dollars) from the IMF would be received in a few months. weeks.
CBK Governor Patrick Njoroge also told a post-Monetary Policy Committee (MPC) meeting that the country expects to receive another loan from the African Development Bank (AfDB). He did not disclose details of the amount, however.
“We expect to receive funding of $ 750 million from the WB over the next two weeks. We also expect the IMF to complete the review of the program sometime in June, which will lead to a disbursement of around $ 410 million, ”Dr Njoroge said.
Kenya’s public debt burden currently exceeds 7 trillion shillings, and the new round of lending comes at a time when the country is spending nearly 1,000 billion shillings a year to service its debts.
Governor Njoroge said the loans are intended to help Kenya implement stimulus strategies and budget allocations in some areas, following the negative impact of the pandemic.
The governor of the CBK added that Kenya continues to seek an extension of the payment of the public debt in order to free up more resources to support the economic recovery.
Dr Njoroge did not disclose how much would be saved through the Debt Service Suspension Initiative (DSSI), saying it would depend on the terms of the extension.
In January, the Paris Club of international creditors accepted Kenya’s request to suspend debt service until the end of June, a move that saved the country more than 17 billion shillings, an amount that , according to the government, would be intended to fight against the impacts of the Covid. -19 pandemic.
The MPC report said various sectors of the economy that contracted amid Covid-19 since last year have been recovering since March.
The report showed that exports rose 5.5% between January and April compared to a similar period last year, while exports of manufactured goods grew by 33.9%.
Imports of consumer and intermediate goods rose 15% between January and April, the financial services sector regulator said, noting that this was an indication that local industries were back to work.
The MPC also reported that the construction sector grew during the four-month period with an increase in cement consumption in the public and private sectors, while the manufacturing sector recovered, increasing productivity.
“Credit to the manufacturing sector has also increased. In January, February and March, credit to the sector increased by 12.6%, 15.8% and 10.7% respectively. Turnover has also increased, while consumption of intermediate goods and electricity has increased, “said Dr Njoroge.
The governor noted that leading indicators in various economic sectors point to a gradual strengthening in 2021.
On the other hand, outflows from outside the country increased by 23.3%, a positive figure coming at a time when the CBK concluded a survey of diaspora remittances, aimed at finding out how the government can help Kenyans living abroad invest more. home.
However, a bank-led survey of CEOs found that many business leaders were still not optimistic about the future, with just 49% considering their business outlook to be positive. .
The survey showed that 36% of CEOs believe the business will stay the same, while 15% believe that the continued effects of the pandemic and the low purchasing power of the population following the cancellation of the relief measures fiscal mean that growth will be even slower than the current situation.
The CBK also noted that the movement stop put in place by President Uhuru Kenyatta between March and May 1 to curb the spread of Covid-19 has had negative economic impacts in some sectors, and has affected credit growth. to the private sector.
However, the Central Bank said that from May the number of loan applications increased.
The MPC continues to stress that there is still uncertainty about how things will develop due to the unpredictability of the Covid-19 pandemic, which has created economic disruption.