[stop-imf] Kenya: Cautious welcome for resumed IMF lending

[Robert Weissman]

www.irinnews.org
KENYA: Cautious welcome for resumed IMF lending
NAIROBI, 24 Nov 2003 (IRIN) - Kenya has welcomed a decision by the
International Monetary Fund (IMF) to resume lending, more than a decade
after
it suspended core lending to the country citing corruption and slow
economic
reform.

The Breton Woods body on Saturday announced that it had approved a
three-year
US $252.75 million loan for Kenya.

In a statement, the IMF said its decision to resume lending to Kenya had
resulted from the government's "strong commitment to break with Kenya's
past
record of uneven economic performance" and bold steps in the fight
against
corruption in key government sectors.

The new National Rainbow Coalition (NARC) government, which came to
power
almost a year ago, has made tackling corruption one of its priorities.

"They [the government] have already taken significant steps in their
fight
against corruption, with the passage of key governance legislation in
May 2003
and the setting up of institutions to enforce the legislation," the
statement
said.

Local economists however cautioned that it was too soon to celebrate,
noting
there were a string of conditionalities for the Kenyan government to
meet if
the funding was to continue.

Kwame Owino of the Nairobi-based Institute for Economic Affairs (IEA)
told
IRIN on Monday that the Kenyan government needed to show sustained
commitment
to reforms over the coming years, if it expected to receive all the
funds
promised.

"The money is being given in batches, which means that trust has not yet
developed," Owino said. "The money is also coming with a lot of
conditions,
which means we might not get all of it, if breaches occur in the process."

And Oduor Ong'wen, executive director of the Nairobi-based NGO, Econews
Africa, said that the resumption of lending could only benefit ordinary
Kenyans if the government set clear priorities to invest in sectors that
benefited the bulk of Kenya's absolute poor - about 56 percent of the
population.

Kenya=92s turbulent relationship with the IMF, the World Bank and other
international donors dates back to 1991 with the suspension of core
funding to
the country as part of efforts to pressure the-then KANU government to
undertake key economic reforms, including privatisation of several key
state
corporations.

According to the IMF's announcement, the current lending falls under its
Poverty Reduction Growth Facility (PRGF) loans, which carry an annual
interest
rate of 0.5 percent and are repayable over 10 years with a five and a
half-year grace period on principal payments.