- According to Reuters, Ruto spoke to Georgieva by phone following the withdrawal which was occasioned by an outrage by Kenyan youths.
- The finance bill containing the tax increases was central to policy reforms agreed by the country with the IMF as part of a lending programme worth $3.6 billion.
Image: PCS
President William Ruto spoke to the International Monetary Fund (IMF) Chief Kristalina Georgieva days after he withdrew the Finance Bill 2024, Reuters has revealed.
According to Reuters, Ruto spoke to Georgieva by phone following the withdrawal which was occasioned by an outrage by Kenyan youths.
Speaking to the publisher, two diplomatic sources, who sought anonymity, revealed the aforesaid.
The finance bill containing the tax increases was central to policy reforms agreed by the country with the IMF as part of a lending programme worth $3.6 billion.
The diplomatic sources did not however provide details about Ruto and Georgieva's phone call.
They however said there was agreement among major donors that the IMF needed to show flexibility on programme targets as the country looked to fill the gap caused by the bill's withdrawal.
One of the diplomats said the government should show a commitment to reducing wasteful spending, cracking down on corruption and increasing accountability in exchange for that flexibility.
"We remain deeply concerned by the recent tragic events in Kenya and maintain close ongoing and constructive dialogue with the Kenyan authorities," an IMF spokesperson said when asked about the call.
The IMF reached a staff-level agreement with Kenya in early June on a policy package needed to complete the lending programme's seventh review, expected to unlock a disbursement of several hundred million dollars.
The deal has not yet received approval from the fund's Executive Board.
A downward trend is likely to continue amid continued anti-government protests and an upcoming IMF review.
The Kenyan shilling is expected to face increased pressure in July due to anticipated declines in capital inflows caused by political instability experts have warned.
Analysts from pan-African market insights firm, Stears, now say that following the protests from June 18 to June 27, the currency depreciated by 0.29 per cent.
The demos have seen the economy take a beating as businesses in the capital Nairobi and other major towns remain disrupted, with little economic activity.
Analysts argue that reduced capital inflows suggest limited foreign exchange reserves at the central bank's disposal, to support the currency in the near term.
Further, the shilling will also be influenced by the dollar, which is expected to remain strong in July as the US Federal Reserve maintains a hawkish stance before its rate cuts begin.
"However, the shilling's movements in July will ultimately depend on market sentiment regarding political developments, exchange rate expectations, and investor confidence. Stears forecasts the shilling to close Q3 2024 at Sh129.42 against the dollar," Stears said in its monthly update.