Debt ridden Kenya lost $1.5 billion from the IMF over failure to complete review processes

The two-year precautionary facility, set to expire next month, was put in place for Kenya in case of unforeseen external shocks that could put pressure on the balance of payments

Kenya's government was stopped from accessing $1.5 billion in credit from the International Monetary Fund in 2017 according to the lender.

The facility has been crucial to the East African country's fiscal strategy in stabilising its local currency, the shilling, against the dollar.

The IMF revealed Kenya lost access to the loan after failing to complete due processes set out.

“The programme has not been discontinued but access was lost in mid-June because a review had not been completed,” Jan Mikkelsen, IMF representative in Kenya, told Reuters.

Kenya's external debt has skyrocketed and figures from the country's central bank indicate the country borrowed over $7 billion dollars to continue an ambitious infrastructural expansion programme.

With investors worried about the country's significant fiscal deficit, the IMF is keen to find a solution to one of the most improtant markets in Africa.

"We have just started discussions,” he said. “I‘m hopeful we will get an agreement.

The interest rate controls should either be eliminated or significantly modified to allow banks to price risks properly and thereby promote an increase in credit to the private sector.”

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