IMF reschedules talks with Kenya over credit extension

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The International Monetary Fund’s mission to assess the Kenyan economy says it will continue talks with the government in the coming weeks as precondition for the extension of $989.8 million stand-by credit.

The IMF said on Friday after a two-week visit to Nairobi that it current visit had achieved “significant progress.”

Kenya secured a six-month extension for its stand-by credit arrangement of 989.8 million dollars from the fund in March, and is seeking another extension when it expires in mid-September.

The IMF has preconditioned the extension of the stand-by credit, used for balance of payments support, on a number of measures, including the repeal of a cap on commercial lending rates, which was imposed in 2016.

Henry Rotich, the finance minister, moved to repeal the cap in his June budget to parliament but some influential lawmakers have vowed not to support the move.

The lawmakers say the budget must still be debated and passed by lawmakers before it becomes law.

The IMF said the visit had been successful because the Kenyan authorities had reiterated their commitment to macroeconomic policies that would maintain public debt on a sustainable path, contain inflation within the target range, and preserve external stability.

It said the East African nation had met its fiscal targets during the 2017/18 (July-June) fiscal year after the government managed to narrow the budget deficit to 7.0 percent of GDP from 9.0 percent the previous year.

The fund said that revenue collection had, however, failed to meet the set target during the financial year, coming in at 2.2 per cent of GDP lower than the set target, without giving the target level.

“To meet the deficit target in this context, the authorities rationalized expenditures,” the IMF said in a statement.

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