The International Monetary Fund (IMF) said it has approved almost 1 billion U.S. dollars for Kenya to help the East African country reduce debt vulnerabilities and tackle climate change.

The IMF approved 415.4 million dollars under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements, which are designed to revive its economy and boost its foreign exchange reserves, and an arrangement under the Resilience and Sustainability Facility (RSF) amounting to 551.4 million dollars to support Kenya's ambitious efforts to build resilience to climate change.

"The RSF-supported program is expected to further integrate climate-related considerations in macro policies and frameworks by adopting green public financial management and climate-sensitive public investment management reforms, introduce carbon pricing, enhance effectiveness of Kenya's existing frameworks to mobilize climate finance, and strengthening disaster risk reduction and management," the IMF said in a statement issued Monday evening.

Antoinette Sayeh, deputy managing director of the IMF, said Kenya's economy has been resilient despite the worst drought in many decades and a difficult external environment. Sayeh said the ECF and EFF arrangements continue to support the authorities' efforts to address emerging challenges to sustain macroeconomic stability and market confidence, promote growth and advance ongoing reforms.

"While the medium-term outlook remains positive, in the near-term global headwinds continue to have a bearing on economic activity, amid elevated inflationary pressures," she said.

According to the IMF, key policy priorities of the program include reducing debt vulnerabilities through multi-year fiscal consolidation efforts. This, it said, will be done through raising tax revenues and rationalizing spending, while protecting priority social and developmental spending.

"Tighter financing conditions also require a prudent debt policy and continued efforts to prioritize concessional loans," Sayeh said.

Kenyan President William Ruto last month signed the Finance Bill into law, which will raise taxes on a wide range of items despite the opposition criticism that it will bring more economic hardship to citizens. While the law has been challenged in court, which stopped its implementation, the government raised the tax on fuel to 16 percent from 8 percent, a move that has seen the cost of various products and transport surge up to 30 percent.

Sayeh called on the Central Bank of Kenya to continue taking appropriate steps to strengthen its reserves position and develop the foreign exchange market while allowing exchange rate flexibility as a shock absorber.