Kenya meets IMF to review policy progress on Sh255 billion

The International Monetary Fund (IMF) on Thursday started reviewing policy reforms that saw it approve $2.34 billion (Sh255 billion) facility for Kenya early this month.

A statement from the international lender said that the agenda of the virtual review mission is to assess the progress on specific policy objectives in line with the program’s proposed timelines.

The fund gave Kenya a number of demands especially on fiscal and governance.

For instance, IMF wants Kenya to seal it's huge fiscal deficit by improving domestic revenue collection.

Before approval of the 36- months facility, Kenya was forced to scrap Covid-19 tax relief measures.

It for instance reinstated VAT to 16 per cent from 14 per and 30 per cent Pay As You Earn from 25 per cent.

Others include going back to Corporate Tax rate of 25 per cent from 20 per cent meant to cushion businesses.

In the review started yesterday, IMF will be checking the progress of wage bill cut and consolidation of state agencies with duplicate roles.

It had also asked Kenya to consider broadening it's tax regime to garner more revenue to cut on debt accumulation.

The country's total public debt is currently at Sh7.28 trillion and is expected to grow past Sh9.1 trillion if the country follows IMF's advice to add state agencies' loans to the public debt.

The three-year financing package will support the next phase of the authorities’ Covid-19 response and their plan to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.

The Fund-supported program seeks to advance the broader reform and governance agenda, including by addressing weaknesses in some state-owned enterprises (SOEs) and strengthening transparency and accountability through the anticorruption framework.