IMF distances itself from tax hikes by Kenya Gov’t

The International Monetary Fund (IMF) is set to send a team to Kenya to work with the government in implementing governance reforms beginning in 2025.

The announcement was made by IMF Deputy Managing Director Nigel Clarke during his first visit to the country.

Clarke, who held meetings with the President, the National Treasury Cabinet Secretary, and the Central Bank Governor, said the Kenyan authorities requested the institution help in a governance diagnostics.

On the recent criticism of IMF engagement with Kenya, and in an effort to set the record straight, the body distanced itself from the heightened taxation measures in the country.

Clarke noted that the role of the institution is solely to offer advice based on the economic environment, and laid the responsibility squarely on the Kenyan authorities for their aggressive tax measures.

“Specific revenue measures are not the design of the IMF, and the specific revenue choices made are totally within the preview of the Kenyan government the IMF is not involved in making specific decisions about specific taxes here or there,” he said.

The IMF further noted that the decision to lower its disbursement to Kenya during the 7 and 8th reviews that were concluded in November is based on their assessment of Kenya's needs at the time.

“Given that the government was successful in its Eurobond issuance early this year, the balance of payment needs declined and as a result because the needs declined the amount of the disbursement was commensurately reduced,” noted Clarke.

The IMF also cautioned the government against taking on more loans, insisting that any new loans taken must be within the context of a comprehensive fiscal strategy designed to reduce the country's debt vulnerability and ensure its consistency with the country's long term fiscal sustainability.

“Given where things stand today is that Kenya’s budgetary arrangements are not built upon a foundation of continually increasing levels of debt,” he said.

Although the IMF has agreed to undertake a governance diagnostics in Kenya, it warns that this will not be an end in itself and cannot resolve all the governance issues but will only present a road map of reforms that can be incorporated in the country.