Senate to scrutinise IMF loan conditions to Kenya – The Star Kenya
Parliament has commenced scrutiny of the ‘tough’ austerity measures imposed by the IMF for loans.
The move could put Kenya on the warpath with the global money lender that it has been running to for financial support.
Senate Speaker Amason Kingi has allowed the Senate’s Finance and Budget committee to inquire into the measures that the legislators fear could escalate poverty in the country.
The International Monetary Fund (IMF) is one of the leading lenders to Kenya and other third-world countries.
However, the institution has imposed several conditions on Kenya as her peers.
They include structural and institutional reforms that many fear could lead to the mass layoff of government employees across state agencies.
In the scrutiny that stemmed from a petition by nominated Senator Hamida Kibwana, the senators want to establish the implications of the IMF measures.
“They should state the reason the IMF has imposed austerity measures on developing countries including Kenya while warning rich countries against austerity measures,” Kibwana said.
The legislator demanded that the National Treasury, through the panel chaired by Mandera Senator Ali Roba to explains the safeguards in place to ensure the measures do not escalate poverty levels.
The committee will also establish how the conditions imposed by IMF will affect Kenya’s capacity to borrow loans from global lenders given that the country is still reeling from the Covid-19 pandemic that devastated the economy.
“The committee [should] give a breakdown of the proposed austerity measures to be applied,” Kibwana said.
The committee will find out whether the measures will directly lead to fiscal budget tightening and adjustment in government expenditures.
Specific sectors targeted by the measures will also be exposed in the inquiry.
“The committee should clarify to the Senate whether the Ministry has plans to ensure that the measures do not put vital public services at risk and exacerbate poverty and inequality,” she said.
The senator implore the probing committee to recommend that the IMF austerity program be tabled in the Senate and in each of the 47 county assemblies for thorough scrutiny.
Just last week, the IMF staff reached a staff-level agreement to disburse $433 million (Sh52.8 billion) to Kenya as part of a $2.34 billion loan approved in May last year.
To access the loan, however, Kenya is expected to continue with structural and governance reforms and 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.
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.
In 2018, then President Uhuru Kenyatta was 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 per cent but Uhuru’s administration stood its ground, fearing a national backlash.
(Edited by Tabnacha O)
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