IMF warns Kenya govt against spending pressure
The International Monetary Fund (IMF) has warned Government overspending during this election period.
The Bretton Woods Institution, while approving a $110 million (Sh9.4 billion) loan disbursement to Kenya under an IMF programme, cautioned the authorities to resist a spending splurge before national elections on March 4, next year.
The Fund also cautioned State to watch out for inflationary pressures that may emerge if global food prices should rise further. “Going forward, it will be important to maintain policy discipline to build on the accomplishments so far,” the IMF said in a statement, announcing the disbursement under a $750 million IMF extended credit facility agreed last year.
The amount constitutes the fourth tranche of the $750.6 million (Sh63.8 billion) three-year Extended Credit Facility arrangement approved in January last year.The latest payment brings the Fund’s total disbursement to Kenya under the arrangement to about $529.6 million (Sh45 billion).
The Executive Board approved a three-year ECF arrangement for Kenya on January 31, 2011 for a total amount equivalent to $500.4 million (Sh42.5 billion), or 120 per cent of quota. The arrangement was later augmented on December 9, 2011 to a total of $750.6 million, or 180 per cent of quota.
IMF has also approved Kenya’s request for a waiver for the non-observance of the performance criterion on the non-accumulation of external arrears for end-June 2012, and the modification of performance criteria for the next 12 months to fit the revised macroeconomic outlook.
In a statement yesterday IMF Board’s Deputy Managing Director and Acting chair Naoyuki Shinohara observed that Kenya is rebounding after slowing down in 2011/12, helped by improved macroeconomic stability, foreign investment in oil and natural gas exploitation, and favourable weather conditions.
By James Anyanzwa, The Standard
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