The International Monetary Fund (IMF) has answered some of the most frequently asked questions by Kenyan citizens who have signed an online petition requesting the organization to cancel the KSh255 billion loan it approved last week.
The fund justifies its decision to grant Kenya with the loan, insisting that the country has a large financing needs on account of the adverse effects that the COVID-19 pandemic has created.
IMF says that the Kenyan government presented a well-though-out medium-term reform program to address the COVID-19 challenges, articulated by the fiscal framework laid out in the recent Budget Policy Statement.
“The IMF is providing policy advice and financing to support the government’s program,” says the Washington, DC based institution.
Asked by many Kenyans what is the main goal for the new loan, IMF says the central objective of the programme is to gradually stabilise public debt.
“The budget deficit will be reduced overtime (as the COVID-19 shock eases) through a combination of revenue mobilization and spending rationalization measures.
“This gradual approach is needed to strike a balance between near-term support for the economy and laying the ground for durable and inclusive growth over the years to come,” says IMF.
The organization has highlighted that the new Kenyan program is aimed at promoting greater transparency in public accounts alongside strengthening the anticorruption framework in the country.
Kenyans also questioned how the new IMF program will advance the governance and anti-corruption agenda in the nation. On it’s part, the organization cited transparent audit reports as the clear way to curb corruption in the nation.
“The authorities’ program contains specific commitments to safeguard public resources and enhance transparency and accountability to reduce corruption risks. The key elements include; publication of an audit of all COVID-19 related expenditures in FY19/20 and promotion of fiscal transparency.”
Finally, the organization has highlighted the importance of awarding Kenya loans despite the country being at high risk of debt distress. “A central focus of the authorities’ program supported by the Extended Fund Facility arrangements is a strong multi-year effort to reduce debt and debt vulnerabilities, laying the ground for durable and inclusive growth over the years to come.”
According to IMF, if Kenya fail to get the loan ,”The alternative to this financing is much sharper fiscal consolidation or much more expensive borrowing on commercial terms.”