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Treasury suggests it might forego IMF stand-by facility

James Momanyi @jamomanyi

The National Treasury yesterday appeared untroubled by today’s expiry of $989.8 million (Sh100.2 billion) pre-cautionary credit offered by the International Monetary Fund (IMF).

The two-year stand-by arrangement precautionary loan, which was approved by IMF board in 2016 lapsed in March this year but was extended by six more months to end today.

But Treasury Cabinet secretary Henry Rotich appeared bullish yesterday opining that the government may forego the facility since the country’s balance of payments looks stronger.

“Our balance of payment has strengthened significantly. IMF does provide balance of payment support to countries that have reserve problems but countries that have graduated and are beginning to strengthen their balance of payment enter into other types of relationship, especially countries entering into middle-level income bracket like us,” said Rotich.

The CS said that the country managed to sail through last year without drawing on the facility even when faced with a number of challenges including the drought that led to imports of food stuff, floods and a volatile General Election.

“If last year we did not draw from the IMF facility, then definitely Kenya has come of age from over-relying on IMF programmes. As one of the countries entering the middle-level economy, we should be relying less and less on IMF facilities. If you have come of age with positive macroeconomic outlook, you need to go to international bond markets where the investors look at the numbers and not whether the country has relationship with IMF or not,” he added.

Treasury principal secretary Kamau Thugge also reiterated that the country’s debt is sustainable and within the threshold of the World Bank (WB) and the IMF.

The World Bank and International Monetary Fund debt threshold to GDP is 74 per cent and we are presently at 49 per cent of net present value, which is far away from the threshold,” said Thugge.

“We are reducing the fiscal deficit, accumulating debt at a much slower pace while the economy is growing. There is no need for Kenyans to be worried,” he added during the launch of the budget preparation process for the financial year 2019/20 and in the Medium-Term.

Treasury projects the economy will expand by six per cent in 2018 and further to above seven per cent over the medium term.

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