IMF approves $209 Million Loan to Kenya

May 31, 2009

On May 30 the International Monetary Fund (IMF) approved a loan of $209 million USD, the equivalent of 16 billion KSH, to stock up foreign currency at the Central Bank of Kenya. Targeted to help Kenya recovering from the impact of the worldwide financial situation and it’s affect on the countries microeconomic stance, this IMF loan comes just in time to support Kenya’s economical recovery.

After the political disturbances during early 2008 Kenya has been cut short by a range of factors, including the impact of rising international prices for food, fuel, and fertilizer.

“This support from the IMF underpins our microeconomic framework that we have implemented to address the challenges emanating from the global financial crisis and the drought”, Uhuru Kenyatta, during a press briefing at the Treasury on Saturday

Food prices in Kenya have increased in recent years as high fuel and fertilizer costs lead to lower agricultural yields. Lack of rainfall during 2008 have further reduced food supplies, especially of maize, the main staple. The number of people affected by food insecurity has risen to around 10 million, according to the government and the United Nations.

Scott Rogers, IMF Resident Representative, says the loan shall help the country to buffer the impact of the high food and oil prices experienced late last year and part of this year. Economic growth in Kenya averaged at an impressive 6% from 2004 to 2007, and is now estimated at around 3% in 2009. The Kenyan government has responded quickly and by easing the countries monetary policy to support economic activity, restructuring public spending and acting to focus on further strengthening the national banking system.

Also a focus on improving the efficiency of food distribution and several programs to ensure better access to basic foods are under implementation and by cooperation with the World Bank to introduce a revised food subsidy program by the end of 2009.

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