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IMF explains why it granted Kenya loan despite public opposition

The International Monetary Fund (IMF) has defended its decision to grant Kenya a Sh255 billion (US$2.34 billion) loan despite public backlash.

In a statement, Antoinette Sayeh, IMF deputy managing director, said “The Kenyan authorities have demonstrated a strong commitment to fiscal reforms during this unprecedented global shock, and Kenya’s medium-term prospects remain positive.”

IMF gave reasons why they had advanced the money to Kenya yet the country still had another multi-billion-shilling loan.

According to IMF, the loan approved is under two programs, the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and it’s for an amount of about Sh255 billion.

Secondly, its approval triggered an immediate disbursement of Sh33 billion (US$307.5 million), for budget support, said the Bretton Woods institution.

Thirdly, IMF said the loan is also a continuation of another loan given in May 2020, equivalent to Sh80 billion (US$739 million).

The new loan is to serve the following purposes: reduce debt vulnerabilities through several channels such as raising tax revenues, controlling spending and protecting vulnerable groups, addressing weaknesses in state-owned enterprises and strengthening the anti-corruption framework.

“The three-year financing package will support the next phase of the authorities’ Covid-19 response and their plan to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups,” IMF said in a statement.

Their statements came as more than 200,000 angry Kenyans have signed an online petition, asking IMF to cancel the recently approved loan as previous disbursements have been lost to corruption and remain unpaid.

Read: Over 150k Kenyans sign petition to stop IMF loans in 24 hours

The government has, however, argued that the debt is necessary to fight the Covid-19 pandemic and reduce debt vulnerabilities.

Treasury Cabinet Secretary Ukur Yatani said access to vaccines is critical, and help from the international community is urgently required.

The 2021 Budget Policy Statement indicated that Kenya’s public debt stood at Sh7.06 trillion as of June 2020, equivalent to 65 per cent of the GDP.

On Twitter, the “International Monetary Fund” was trending all day with over 10,000 posts from Kenyans alongside a host of hashtags urging the fund to stop giving Kenyan money.