IMF in Talks With Kenya Over New Precautionary Credit Facility

  • Institution considering request to extend $688 million credit
  • Kenya hasn't drawn on that loan facility, agreed on last year

The International Monetary Fund is considering a request to extend Kenya’s $688 million stand-by credit facility while working out details of a new program, the institution’s resident representative said.

“We are working on a request for an extension for a few weeks while we continue discussing options for future engagement,” Armando Morales said Tuesday in response to e-mailed questions. “The authorities and the fund are interested in continuing relations, ideally under a new program.”

The IMF agreed to the precautionary facility to cushion East Africa’s biggest economy against major shocks in 2015. Kenya has not drawn down on the loans. The central bank projects the nation’s current-account deficit will be 8.8 percent of gross domestic product this year, from about 8.5 percent in 2015 and 10.4 percent in 2014.

Inflation, which accelerated above the central bank upper limit of 7.5 percent in December, has remained high because of food prices. The outlook will become clearer once seasonal effects dissipate in April, Morales said.

“We are confident that the government will continue giving high priority to fiscal prudence and macroeconomic stability,” he said.

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