Kenya is set to receive an additional Sh162.5 billion loan from the International Monetary Fund (IMF) as President William Ruto demonstrates a strong commitment to implementing agreed-upon tax policies.
This brings the total loans received under the 38-month IMF program to Sh484.9 billion ($3.52 billion), aiming to replenish foreign exchange reserves and address challenges related to drought and climate change.
The IMF commends Ruto’s tax proposals, recognizing their potential to reduce the country’s budget deficit. The IMF mission led by Haimanot Teferra states that the government has promptly responded to challenges, demonstrating prudent spending and proposing new revenue measures to lower the debt-to-GDP ratio.
Some of the suggested measures include increasing the value-added tax, excise duty on beauty products, and the pay-as-you-earn tax for higher earners. In addition to the loan augmentation for addressing shocks like drought, Kenya has also requested Sh86.9 billion ($636 million) under a new Resilience and Sustainability Facility (RSF) arrangement. If approved, this would bring the total IMF financial support disbursed to Kenya under the EFF, ECF, and RSF arrangements to Sh480.8 billion ($3.52 billion).
The RSF arrangement is proposed to extend until April 2025 alongside the existing EFF/ECF arrangements.