An IMF delegation is set to visit Nairobi this month to resume negotiations over the $1.5 billion standby facility intended to cushion the Kenyan shilling from major economic shocks..
“Sometime this quarter, end of February early March we will meet the IMF mission to continue with negotiations,” said the Central Bank of Kenya (CBK) governor Dr Patrick Njoroge.
A standby facility acts as insurance to cushion the country, particularly the shilling, from external economic shocks.
Dr Njoroge set the tone for the negotiations by maintaining that Kenya will not be bullied into accepting any conditions.
The IMF has been critical of the country’s total debt standing, which it reckons is way above government official figures if public guarantees and parastatal debts are included.
“We know what we are doing in managing the economy and we do not need anybody to come and tell us what to do,” said Dr Njoroge at a media briefing following Monday’s Monetary Policy Committee (MPC) meeting.
He added that although Kenya requires the insurance, the country is not under any pressure or in a rush to secure it. The facility is important in cushioning the country against any shocks to the balance of payments and the stability of the shilling, even though Kenya is anticipating less pain this year with easing of the external current account deficit, stable inflation and less volatile shilling.
“For us it is beneficial to have insurance because the world is a risky place. We need insurance for extreme events as it gives as room to manoeuvre in setting policy. Hopefully we will get the insurance,” said Dr Njoroge.
The two-year standby loan facility expired in September 2018.
Kenya was unable to secure a renewal last year after an IMF delegation cancelled a trip to the country following the suspension of National Treasury’s two senior-most officials over corruption allegations. Mr Rotich and his principal secretary Kamau Thugge were charged with corruption offences.
Although Kenya has repealed the interest rates capping law that was one of the conditions by IMF for approval of the facility, the country is grappling with fiscal consolidation conditions that are proving difficult to implement despite repeated assurance.
