By Lucy Adautin
Kenya has presented an economic recovery plan to the International Monetary Fund (IMF), anticipating a board review for approval by the end of August, the country’s chief minister informed a parliamentary panel.
The plan follows widespread youth-led protests against tax hikes proposed by President William Ruto’s government, which resulted in at least 50 deaths.
Chief Minister Musalia Mudavadi stated that the Treasury had engaged robustly with the IMF despite setbacks from the tax-hike protests. “It is our desire and hope that Kenya’s proposition will receive favourable consideration so that we can move beyond the challenges that we are facing,” Mudavadi told the parliamentary budget committee, Tuesday.
The IMF did not immediately comment. Kenya, which has a $3.6 billion IMF program, had reached a staff-level agreement on the seventh review of its program in early June. However, the IMF board had not approved the review when President Ruto abandoned the tax hikes, a key element in meeting IMF targets. Investors noted that the political turmoil could complicate securing IMF funds.
During the review, Kenya had sought IMF waivers after failing to meet targets on budget balance and tax collection. Mudavadi revealed that the revised spending plan for the 2024/25 financial year projects a budget deficit increase to 4.2% of GDP, up from 3.3% prior to the finance bill’s withdrawal.
“The revision to the deficit barely a week after the initial plan underlines the herculean task faced by the authorities to achieve their fiscal consolidation goals,” commented Ayodeji Dawodu, head of Africa research and strategy at BancTrust & Co, in a note.
