Nairobi, Kenya, is expecting an International Monetary Fund (IMF) delegation to visit some time in February regarding a US$1.5 billion “standby facility” intended to protect the Kenyan shilling from external economic shocks. A prior IMF delegation en route to discuss this standby loan was unable to complete their work following the suspension of Kenya’s National Treasury cabinet secretary Henry Rotich and principal secretary, Kamau Thugge, on charges of corruption. The delegation will discuss fiscal and economic policy Kenya will need to put into practice in order to unlock the standby facility.
The IMF has been critical of Kenya’s total outstanding debt, with a debt-to-GDP ratio of 60 percent in 2018, which it believes is being underreported by Kenyan authorities. The Central Bank of Kenya governor Patrick Njoroge took umbrage to this and chastised the IMF’s attempts to pressure the country. At a media briefing following a Monday Monetary Policy Committee meeting, Njoroge gave the assurance that Kenya is not in desperate need of such a standby loan, which expired back in September 2018.
Kenya is expecting a less volatile fiscal year, having eased the external current account deficit, stabilized inflation, and otherwise made the Kenyan shilling less unstable. Still, the East African country is struggling to impose fiscal consolidation conditions included as part of the prerequisite to unlock the IMF loan. Other conditions include a tax hike to increase revenues and curb excessive borrowing behavior, and expenditure reforms with an emphasis on prioritizing social programs like education and health services.
An IMF report issued in mid-January accused former cabinet secretary Rotich of obscuring the true nature of Kenyan debt by excluding government guarantees and massive loans taken on by public entities. The country’s public debt has far exceeded the US$88 billion ceiling imposed by its parliament last year, and public sector assets and liabilities are estimated to be 116 percent and 121 percent of GDP, respectively, about a 30 percent increase since 2014. Njoroge, for his part, dismissed the IMF’s concerns and pointed to National Treasury cabinet secretary Ukur Yatani’s “ solid plan on consolidation”.