In brief
- On Wednesday 30 October 2024, the IMF Executive Board approved the combined 7th and 8th reviews under the Extended Fund Facility/Extended Credit Facility (EFF/ECF) and the Resilience and Sustainability Facility (RSF), allowing the disbursement of a cumulative USD 606.1mn.
- As telegraphed by the June 2024 Staff Level agreement (our thoughts here), the cumulative disbursement under the current programme reverts to normal access following the KENINT 2024 partial buyback in February 2024 that lowered the necessity for accessing IMF financing under exceptional access.
- We estimate end-2024 inflation at 2.5%, at the lower end of the target band (5.0% ± 2.5%), and an average of 2.65% implies that the authorities may avoid triggering Monetary Policy Consultation Clause upon expiry of the IMF programme.
- With the impact of the shelving of the Finance Bill 2024, there has been a revision in the fiscal target from tax revenue to ordinary revenue, tax revenue plus ordinary revenue, for the December 2024 monitor date.
- The proposed Tax Laws (Amendment) Bill 2024 and Tax Procedures (Amendment) Bill 2024 are aimed to bring back the progressive aspects off the shelved Finance Bill 2024 and are likely to be tabled in the National Assembly early this week.
- Notably, the primary balance is projected to grow from 1.4% of GDP in FY25 to 2.5% of GDP in FY29, way past the completion of the current IMF programme. We opine that the successor programme will be a non-financed one, considering Kenya’s cumulative access will be at the maximum allowable 600.0% quota at the end of the current programme.
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