Kenya risks losing Sh24.4b third IMF tranche payment

Kenya risks missing out on the Sh24.4 billion third International Monetary Fund (IMF) tranche this financial year after it failed to feature in the lender’s executive board calendar despite Treasury having factored the cash in the budget.

The financing arrangement had been agreed by the IMF country staff and the government and was pending approval by the IMF executive board, but the latest calendar of the institution shows that Kenya is not part of the countries they will be meeting next month. “Seems like that $244m IMF third-tranche disbursement to Kenya may not happen in this fiscal year. A hole on Kenya’s fiscus, albeit marginally, but the undertone speaks volumes,” said IC Group analyst Churchill Ogutu.

“IMF staff and the Kenyan Authorities had reached a staff level agreement on economic policies to conclude the third review of the 38-month EFF/ECF financed programme. 

Kenya would have access to $244 million in financing once the review is formally approved by the IMF executive board,” IMF had said in a statement in April this year.

Kenya is headed for a general election in less than two months which could make it difficult for binding negotiations given the expected change in regime.

Upcoming discussions

“Kenya was not in the IMF’s Executive Board’s in-tray between April 25 (when the presser came out) and last Friday, 17th June it is also not lined up for the upcoming discussions until next Friday, 1st July,” said Ogutu. National Treasury had budgeted Sh57.5 billion as cumulative disbursements by the IMF this financial year. 

The disbursements were to follow after the second and third reviews, with the Executive Board’s approval.

Despite positive commendations by the IMF board on the country’s economic policies, the lender had disagreements with the Treasury over the fuel subsidy program and had reportedly asked that the government end the programme. 

Kenya has so far spent over Sh67 billion subsidising fuel prices and Cabinet S ecretary Ukur Yatani (pictured) had earlier said the programme is not sustainable.

In the month of July the IMF is meeting Ireland, Seychelles, DRC, Jordan, Niger, Sierraleone, Gabon, Portugal, Serbia and Congo.