An International Monetary Fund standby loan of $1.5 billion is credit positive for Kenya, with an accompanying program helping East Africa’s biggest economy maintain macroeconomic and institutional reforms, Moody’s Investors Service said. The two-year precautionary facility, which Kenya can only draw from in an emergency, provides a buffer for the nation’s external vulnerability.
The $55 billion economy has expanded in the past few years mainly because of infrastructure projects including new roads and a $3.2 billion railway. As a result, its fiscal gap and current-account deficits have widened. The shortfalls have led to increased domestic and external debt and a decline in the nation’s debt affordability. The government plans to reduce its fiscal deficit to 4.3 percent of gross domestic product in fiscal 2018, and 3 percent by 2020 from 6.9 percent in 2016. Read more on this story here.