The IMF is exerting too much control over Kenya's economic policies, the Kenya Debt Relief Network, Kendren, a lobby group, has charged. Launching a report on Kenya's external debt in Nairobi yesterday, Kendren said the IMF has destructive influence on Kenya's economy and needs to be stopped.
They further accused the Bretton Woods institution of interfering in local affairs that did not concern them such as implementation of the constitution including support for two controversial financial bills that the high court has stopped from being presented to parliament. “The IMF is big on policy capture and policy control,” Kiama Kaara, the programmes coordinator at Kendren said. “They control our whole macroeconomic framework and do not even raise the money to drive that.”
Kendren said the US$500million the IMF gave to Kenya under what it calls the Extended Credit Facility did not justify the kind of conditions it gives to the country.
After disbursing the first tranche of US$100million (Sh9billion), the IMF sent a country mission to come and assess the implementation of certain economic policies subject to which it would approve further disbursements.
Following the two-week visit in March, to review Kenya’s economic policies, then team led by Domenico Fanizza called on the government to increase interest rates and reduce the budget deficit to cool down inflation and achieve sustainable growth.Despite those policies being carried out, inflation has continued to rise and the Kenya Shilling is even weaker.
Then, the IMF maintained that it was not dictating policies to Kenya although it said it was approving the disbursement of a second phase of funding because it was satisfied that both Treasury and CBK were undertaking the right policies as agreed when the Fund gave Kenya an extended credit facility (ECF) of US$500million (Sh40billion) in January.
Fanizza cited measures such as the formulation of a comprehensive Public Finance Management Bill and the demutualization of the Nairobi Stock Exchange process.
Despite its notorious reputation for flawed economic prescriptions under the infamous structural adjustment programs in the 1980s and 90s, Fanuzzi denied that the current policy recommendations would hurt growth. ”Our impression is no. Everything has been developed by the (Kenyan) authorities,” Fanuzzi said. But according to Kendren, countries like Kenya typically get a pre-formatted form which they fill in but which the IMF later says originated from them even though it is structured to meet the Fund's goals “I think African countries need to maintain that they don't want to deal with the IMF,” Kaara said.
Both Fanizza and Treasury's Joseph Kinyua when interviewed by The Star in the past denied that the IMF was imposing conditions on Kenya and said the prescriptions it gave originated from Kenyan policy makers.
Speaking at the same function, Felister Kavisi, the Senior Assistant Director at Treasury's department of debt management said it was necessary to work with the IMF and World Bank.
