Kenya to Submit Revised Fiscal Strategy to IMF

The Kenyan government faces a major challenge following the withdrawal of the Finance Bill, 2024.

As reported by Al Jazeera, the administration may need to present a revised revenue strategy to the International Monetary Fund (IMF). This development comes in the wake of stringent revenue-raising measures proposed by the IMF, necessitating a reevaluation of Kenya's approach to meeting its financial objectives. Under IMF protocols, member countries are required to submit their proposed economic reforms for review before the disbursement of funds.

In Kenya's case, these reviews occur biannually. The government is tasked with formulating an alternative plan to present to the multilateral lender now that the option of implementing additional taxes is off the table. This development comes after President Ruto recently had a phone call with IMF Managing Director Kristalina Georgieva. However, the specifics of their discussion were not made public.

Diplomatic sources suggest that efforts are being made to encourage the IMF to adopt a more flexible stance regarding Kenya's borrowing terms. In response to these challenges, the government has outlined plans to generate essential funds through a combination of budget cuts and borrowing. Specifically, Ruto's government aims to reduce the current fiscal year's budget by approximately Sh177 billion ($1.39 billion) and secure loans of around Sh169 billion ($1.31 billion).

These measures have garnered support from economic experts who argue that such strategies should have been prioritized over imposing additional tax burdens on Kenyan citizens. A senior economist from Stears Inc. has commented on the situation, stating, "They’re now basically doing everything they were supposed to do before. When the IMF gives you conditions, you don’t need to pass on the bulk to the people when you know the situation in your country"