skip to Main Content

Kenya seeks IMF approval to use Sh14bn World Bank Covid loan

Economy

Kenya seeks IMF approval to use Sh14bn World Bank Covid loan


Treasury building in Nairobi on June 11, 2020. PHOTO | SILA KIPLAGAT | NMG

BDgeneric_logo

Summary

  • Kenya is asking for waivers of the IMF’s spending limit to use the World Bank’s 14.6 billion shilling vaccine loan without exceeding the agreed deficit.
  • Kenya’s budget deficit averaged 7.6 percent between June 2013 and June 2020 against a target of 4.0 percent, but now the IMF has set tough targets, including how much Kenya can borrow.

Kenya is requesting waivers of the International Monetary Fund (IMF) spending limit to use the World Bank’s 14.6 billion shillings vaccine loan without exceeding the deficit agreed with the multilateral lender.

Kenya’s budget deficit averaged 7.6% between June 2013 and June 2020 against a target of 4.0%, but the IMF has now set tough targets, including how much Kenya can borrow to finance the economy. gap under 38 month program.

The program, however, provides flexibility to process social and emergency spending with the approval of the multilateral lender.

Kenya signed the vaccine deal with the World Bank in June, but the lender has yet to disburse the loan, saying the billions of shillings will flow into the treasury once Kenya meets certain undisclosed conditions.

The IMF’s Article IV documents, the review of government accounts that led to the release of the additional 29 billion shillings this month, show that the approval of the multilateral lender was required for the government to spend the money. silver.

“The flexibility built into the conditionality of the program addresses this need by allowing Kenya to execute its Covid-19 vaccination program without facing undue constraints,” the Treasury told the IMF.

“We therefore request the modification of the end-June 2022 limit on the primary balance to take into account the use of resources related to Covid-19 made available by the World Bank ($ 130 million),” said the Treasury.

The World Bank and the IMF play a role in shaping policies that would force the government to implement tough conditions in many sectors.

The terms come on the back of their multibillion shillings loan facility in Kenya, where money flows directly into the budget to supplement public funds.

Under the administration of former President Mwai Kibaki, Kenya has steered clear of this type of credit, with much of the support from institutions like the IMF and the World Bank taking the form of backstopping. to projects.

Kenya recently faced a deteriorating cash flow situation marked by stagnant income, worsening debt service obligations and the effects of the Covid-19 pandemic.

Kenya is counting on the World Bank loan to speed up its vaccination program to immunize the entire adult population by the end of next year.

The loan would enable Kenya to purchase vaccines to complement the COVAX program and bilateral grants to support the immunization program would help Kenya move even closer to its goal of immunizing 10 million people by the end of 2021 and every year. adults by the end of 2022.

The government has received 23.2 million doses of Covid-19 vaccine and vaccinated 8.9 million adults out of 47 million Kenyans.

About 5.3 million Kenyans have undergone a first vaccine and only 3.5 million are fully vaccinated, according to the Department of Health.

Funding from the World Bank will help Kenya to purchase vaccines through an African Union mechanism established for this purpose, as well as through COVAX, the global equitable sharing of vaccines program.

The money will also be used to strengthen Kenya’s cold chain facilities for vaccine storage, training of health personnel and other related activities.

Kenya needs 34 billion shillings to ship 36 million doses of Covid-19 vaccine by June next year, when it expects 16 million people to be vaccinated.

Donors will provide 20 billion shillings, leaving Kenya to seek 14 billion shillings from taxes and donors like the World Bank.

COVAX, which is led by the GAVI vaccine alliance with WHO and other partners, aims to deliver more than 1.3 billion doses to 92 low- and middle-income countries, covering up to 20% of their population.

Kenya will offer free Covid-19 vaccines to its citizens, but will pay $ 7.70 (Sh 853.70) per vaccine injection, as negotiated under the COVAX facility.


Source link

Back To Top