By Judy Maina
NAIROBI — In a parliamentary session on Saturday, John Mbadi, the nominee for Kenya’s finance minister, emphasized the importance of the International Monetary Fund (IMF) in stabilizing the country’s economy.
However, he underscored the need for Kenya to reduce its dependence on the IMF by addressing its budget deficit and seeking cheaper debt options.
Over the past two months, Kenya has experienced significant unrest due to protests against proposed tax hikes, compelling President William Ruto to retract this year’s funding plan.
In response, the East African nation expanded and extended its lending program with the Washington-based IMF, initially agreed upon in 2021.
“The IMF will never invite themselves to a country. We do invite them and agree on a programme,” Mbadi stated during the vetting panel.
He stressed that Kenya should not remain under an IMF program for an extended period, advocating for a shift toward self-reliance.
“We must move to a system in which we devolve ourselves from the IMF, and start depending on ourselves,” Mbadi declared.
He suggested reducing the annual budget deficit to between 2.5% and 3%. Following the withdrawal of the tax hikes, the projected deficit for this financial year stands at 4.4% of GDP.
Mbadi, aligned with Ruto’s prospective government, assured that he would not endorse new taxes or tax increases if confirmed. Instead, he called for enhanced efficiency within the tax authority and a crackdown on areas like customs duties where revenue is lost to smuggling and counterfeiting.
He also emphasized the necessity of restructuring the nation’s public debt to manage liabilities more effectively, stating that “debt accountability” would be his priority.
“We must restructure our debt,” Mbadi asserted, advocating for a reduction in expensive commercial debt, currently at an unsustainable 8-9%, which constitutes 23% of Kenya’s external debt.
His target is to lower this to no more than 5%, favoring cheaper multilateral sources such as the World Bank.
Mbadi proposed that debt accountability should include the annual publication of a debt register detailing amounts owed to creditors and associated costs.
This approach is intended to enhance transparency and fiscal responsibility.
Amid these proposals, Kenya continues to grapple with the fallout from recent deadly protests, which resulted in over 50 fatalities and prompted credit rating downgrades.
Fitch Ratings downgraded Kenya’s credit rating to “B-” from “B” on Friday, reflecting the ongoing economic challenges.
In a bid to stabilize the situation, the government has presented a new economic repair plan to the IMF, with the board expected to review it by the end of the month.
If confirmed as finance minister, Mbadi intends to reform the ministry’s economic unit to produce more accurate budget and revenue forecasts, aiming for a more sustainable fiscal future.
The writer of this story can be reached at: judy.maina@alleastafrica.com
