- The International Monetary Fund (IMF) had agreed for a three year $2.4 billion funding programme for Kenya in February 2020.
- However, IMF may hit the pause button if Kenya’s three-month average inflation crosses the target set by the Central Bank of Kenya (CBK) as stated in IMF country report of Kenya released last month.
The International Monetary Fund (IMF) had agreed for a three year $2.4 billion funding programme for Kenya in February 2020. However IMF may hit the pause button if Kenya’s three-month average inflation crosses the target set by the Central Bank of Kenya (CBK) as stated in IMF country report of Kenya released last month.
As part of the memorandum of understanding that guided the programme, the Kenyan government had agreed to a monetary policy consultation clause, if inflation breached the CBK target. The core mandate of CBK is ensuring price stability with an inflation target of five percent plus or minus 2.5 percentage points. In the event of not meeting the target, the CBK will be required to enter into consultations with the IMF, to identify the causes and work out remedial measures. The funding agreement includes other economic parameters also such as debt, public finance and state corporation reforms.
The IMF Executive Board would review the current status of the monetary policy and the progress of the Fund-supported programme; the causes for programme deviations, compensating factors; and remedial measures if necessary, said the IMF statement. Accesses to Fund resources will be interrupted until the consultation are complete.
