Kenya will not be eligible for emergency loans announced this week by the International Monetary Fund (IMF) to help vulnerable countries cope with food shortages and rising costs resulting from Russia’s war in Ukraine.
The IMF said its new food shock window will be open for one year through its existing Rapid Credit Facility and Rapid Financing Instrument programs.
This will be for countries with “urgent balance of payments needs” and “suffering from acute food insecurity, a sharp food import shock or a grain export shock”.
The IMF announcement did not mention any specific country that would be eligible for low-conditional emergency loans under the new window.
However, The Saturday Standard has learned that Kenya, which is battling severe inflationary pressures from soaring food and consumer prices, is being barred from the facility, which will be a blow to the new government’s efforts to fight against food insecurity.
An IMF spokesperson told The Saturday Standard in an interview on Thursday that Kenya was among some 25 countries in sub-Saharan Africa severely affected by global food shocks and met the established criteria for the global food shocks window.
However, the spokesperson added that the initiative is created to “address critical needs and complement the IMF’s existing toolkit.”
“As such, countries already engaged with the IMF through active borrowing programs that are on track – as Kenya has done, with its economic program supported by the Extended Facility arrangements (EFF) and Extended Credit Facility (ECF) – would not be eligible to use the new facility,” the spokesperson said.
Kenya will, however, be able to apply for increased access to finance under its existing lending programs, the IMF said.
Kenya entered into a 38-month loan agreement with the IMF worth $2.34 billion (282.1 billion shillings) when approved in April 2021.
“The financing needs of these countries must be met within the framework of their existing programs, including by an increase if necessary,” the IMF spokesman said.
With the new emergency food shock financing, the IMF aims to try to alleviate war-induced shortages that are fast becoming the worst food security crisis since at least the 2007-2008 global financial crisis, putting immediate jeopardy the lives and livelihoods of 345 million people. , and a $9 billion (108 billion shillings) increase in import bills for the most exposed countries.
“For some time now, the combination of climate shocks, the pandemic and regional conflicts has disrupted food production and distribution, driving up the cost of feeding individuals and families,” said the director general of the IMF, Kristalina Georgieva, in a statement.
Exposed to crisis
Ms Georgieva said separately that 48 countries around the world are particularly exposed to the food crisis.
“Of the 48 countries, around 10 to 20 are likely to request (emergency assistance),” she said, adding that “many of them” are in sub-Saharan Africa.
“We are here for you,” she promised the members.
Kenya received a 7.56 billion shillings loan from the African Development Bank (AfDB) in July to support the acquisition of fertilizers and seeds for 650,000 local farmers to boost food production and control the consumer price inflation.
The loan was part of the AfDB’s $1.5 billion (180 billion shillings) African Emergency Food Production Facility, a continent-wide initiative aimed at averting a looming food crisis exacerbated by war in Ukraine.
Kenya is yet to tap the AfDB loan, which includes the delivery of certified seeds, fertilizer and agricultural extension to 650,000 farmers to boost productivity.