Kenya has secured over Sh78 billion to address the balance of payments gap resulting from the effects of Coronavirus pandemic.
IMF executive board while approving the facility noted that Covid-19 has had adverse effects on the East African nation’s economy adversely shaking its tourism, transport, and trade components.
In a statement, the body said it plans to conduct an independent audit to ensure that the funds are put in proper use. The authorities plan to conduct independent post-crisis auditing of COVID-19 related expenditures and publish the results.
“The COVID-19 pandemic has delivered a large economic shock to Kenya. The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs,” said Tao Zhang IMF deputy managing director and acting chair.
“Emergency financing will deliver liquidity support to help Kenya cover its balance of payments gap this year. It will provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis. It will also catalyze necessary financing from other donors.”
He continued saying a pause in the authorities’ fiscal consolidation plans to accommodate COVID-19-related measures is appropriate.
These measures should be temporary and well-targeted. Once the crisis abates, it is critical that the authorities resume their pursuit of a growth-friendly medium-term fiscal adjustment, including raising revenues as a share of GDP, to reduce debt vulnerabilities.
The institution noted efforts by the central bank of Kenya in maintaining sufficient liquidity in the financial sector. It called on the country’s financial regulator to stand ready to further support the economy and the financial sector’s health, as necessary while ensuring that policy decisions are data-driven.
Kenya has 581 confirmed cases of the novel coronavirus and 26 deaths.
The virus has badly hurt major sectors such as tourism, horticulture, and manufacturing.
To limit the spread of the coronavirus, the country has suspended commercial flights in and out of the country, imposed a dusk-to-dawn curfew and banned public gatherings. It has also halted movement in and out of five regions most affected by the virus, including Nairobi, the capital.
The Finance Ministry forecasts 2020 economic growth will decline to 2.5 per cent but may fall to 1.8 per cent compared with 5.4 per cent growth in 2019, as a result of the outbreak.
The World Bank said last month that economic growth was expected to fall to 1.5 per cent this year, and would contract 1 per cent in the worst-case scenario under the impact of the outbreak.
The IMF forecasts growth of 1.0 per cent this year for Kenya.
Are you suspecting that you have coronavirus? Before you rush to the hospital, do this quick easy self-assessment test. #StayHome #WashYourHands HERE.