Kenya set for March talks on standby loan

Kenya is set to hold discussions with the International Monetary Fund (IMF) from March about a cautionary facility.

Central Bank of Kenya (CBK) Governor Patrick Njoroge said on Tuesday at a briefing that Kenyan officials are, however, not under pressure to secure a deal within set deadlines, as the Kenyan economy is well protected against capital outflows.

“We want to have insurance for extreme events. This isn’t a bailout…we are more relaxed,” he said.

“They’ll be coming at the end of this quarter sometimes in February or March.”

The scheduled meetings mark the latest round of talks after previous efforts to renew the Sh150 billion facility that expired in September 2018 failed due to unfulfilled requirements which included achievement of lower fiscal deficit and removal of the rate cap on bank customer loans.

Kenyan authorities were unable to meet conditions of the multilateral lender — technically called completing a review — because the Treasury was pursuing an expansionary budget that made it impossible to, for example, cut fiscal deficits to the set targets for several consecutive years.

Kenya was also under pressure to curb its borrowing appetite, with the IMF having expressed concern about the rate at which public debt was growing.

The government however successfully repealed the rate cap in this year’s budget, setting the stage for renewed engagement with the IMF on the facility. Treasury Cabinet Secretary Ukur Yattani has also announced massive spending cuts in State programmes.

“Hopefully we will end up getting insurance that is good for us,” said Dr Njoroge, who said there were no timelines as to when the talks were likely to be concluded.