IMF urges Kenya to fix fiscal framework, cut debt vulnerabilities to spur growth

President William Ruto and IMF Managing Director Kristalina Georgieva during a past meeting.[File,Standard]

The International Monetary Fund (IMF) has called on Kenya to strengthen its fiscal framework and reduce debt vulnerabilities to improve the country's resilience against economic and climate shocks.

IMF Deputy Managing Director Nigel Clarke, who concluded a three-day visit to Kenya on Tuesday, said the authorities face a difficult balancing act of fulfilling the aspirations of Kenyans by delivering on priority social and developmental needs even as debt servicing obligations consume a large share of the government's revenues.

"I encouraged the authorities to continue efforts to create the fiscal space needed to finance priority investment and social spending, and make further progress in investing in human capital and greater inclusivity," Clarke said in a statement released on Tuesday evening.

He encouraged authorities to remain engaged with all relevant stakeholders and friends of Kenya on the path forward and effectively engage with Kenyans on the policy options to strengthen public trust.

Some Kenyans have raised concerns about the government's heavy borrowing from the IMF, saying it has done little to improve their lives.

The IMF was also blamed for protests in Kenya in June and July over high taxation, with protesters arguing that citizens are paying more taxes, so Kenya can repay the loans. However, the IMF argued that the money it provided to Kenya has helped alleviate market concerns and allowed the government access to the bond market.

Clarke emphasized the importance of ensuring that revenues are well spent by strengthening public financial management, governance, transparency, and anti-corruption frameworks.