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The International Monetary Fund (IMF) says it is ready to lend to Kenya but only if the country meets certain set conditions.
Speaking on the sidelines of the annual IMF meeting in Washington DC, the fund’s African Department director Abebe Selassie said they have enough resources to support countries with strong performance like Kenya.
”We have a strong performing programme with Kenya and hope this will continue with the advancement of the required reforms. Should the country need more financing, we of course will look at that,” Abebe said.
In April last year, the fund handed Kenya a $2.3 billion (Sh257 billion) facility to assist the country to reduce its debt levels by increasing tax revenues and containing spending.
To get the fund, IMF issued several conditions including the revelation of beneficial owners of companies contracted by state agencies.
Kenya was also expected to, among others, reform state enterprises, conduct a special audit on Covid-19 expenditure and enforce wealth declaration by public servants to access the loan in tranches.
The country was also expected to implement a common payroll system across ministries, departments, agencies and counties. It was also expected to conduct a special audit on Covid-19 expenditure.
Kenya was handed a June 30, 2022 deadline to meet the conditions but failed to meet some, forcing it to request a waiver in July.
This is not the first time IMF is setting tough conditions for Kenya in order to continue drawing into a standby facility.
President Uhuru Kenyatta was in 2018 forced to cut VAT on fuel to eight per cent after the introduction of a 16 percent levy prompted protests from motorists and business lobbies.
The tax was originally included in a law passed in 2013 after a push by IMF but was postponed several times, amid complaints about its impact.
Last year, IMF piled more pressure on Kenya to push VAT on petroleum products to 16 percent but Uhuru’s administration stood its ground, fearing a national backlash.
Protests against IMF loans have been taking place in many countries, including Argentina, where citizens took to the streets in 2018 to protest the $50 billion facility.
The purpose of the bailout was to stem the capital outflow, support the falling Peso and encourage inward foreign investment.
In exchange for the loan, the government promised to cut the budget deficit and control inflation.
The loan failed to achieve targets, forcing the Argentinian government to cancel the loan programme and embarked on a debt renegotiation with private creditors.
At this point, the IMF had already disbursed $45 billion.
In 2016, Eqyptian authorities were forced to lower fuel prices following demonstrations against an IMF-backed decision to eliminate fuel subsidies.
Similar protests have also taken place in Jordan, Lebanon and Ecuador in recent years.
While taking over power mid-last month, President William Ruto promised to renegotiate loan repayments and keep off expensive commercial debts that have since pushed up the country’s public debt to over Sh8 trillion.
Kenya is trying to balance its debt portfolio after commercial debt piled up and became expensive to repay, taking up more than 63 percent of tax revenue.
On Friday, IMF said Kenya is yet to approach it for loan renegotiation.