Kenya's Mwai Kibaki has battled against corruption

Assistance had been frozen because of concerns over corruption and due to the country's poor economic record.

President Mwai Kibaki says he hopes donors will follow the IMF's lead and resume financial support.

Aid has increased since Mr Kibaki became president last December and started tackling corruption.

"The government has put in place adequate measures to ensure proper use and management of donor funds," a statement from the president's office said.

Job creation

The IMF is allowing Kenya to immediately draw $36.1m of the three-year loan under its Poverty Reduction and Growth Facility (PRGF) which provides low interest loans to developing countries.

The Fund - and its sister body, the World Bank - had cut off the flow of money to Nairobi, after what it saw as the refusal by the former government of Daniel arap Moi to take action against Kenya's all-pervasive corruption.

But after President Kibaki took power and pushed through laws to curb corruption and strengthen the judiciary, the institutions changed their stance.

Approval of the loan is likely to encourage foreign investment and donations from individual countries.

The programme attached to the loan aims to create jobs, reduce domestic debt and reform the country's financial system.