IEA launches macroeconomic study on IMF conditions to Kenya

The Institute of Economic Affairs in collaboration with the International Development Economics Associates (IDEA) has today launched a Macroeconomic study on the International Monetary Fund's conditions in Kenya.

IEA is an independent body that produces reports, books and papers on all areas of economic policy, as well as a termly journal on economic affairs.

IDEA is a pluralist network of progressive economists across the world, engaged in research, teaching, and dissemination of critical analyses of economic policy and development.

The macroeconomic study aims to critique, assess and analyse the economic policies and reforms required by the International Monetary Fund as part of its financial assistance programs.

The study incorporated data from 30 years in the past to the present day to paint the picture of the extent to which IMF's conditions have impacted the country and its economy.

The study revealed that Kenya has lagged in comparison to its peers highlighting a low growth rate in the economy.

It further explained how the government has overspent in building infrastructure and has eventually plummeted into public debt.

Additionally, it revealed that the country fell into financial trouble when the Covid-19 pandemic struck the country in 2020.

The study unveiled that the IMF implemented remedies aimed at helping the country recover from financial trouble which had concealed shortcomings.

The study highlighted that the conditions demanded by the IMF lacked a substantial explanation for the methodology at which it arrived at said remedies.

Speaking during the launch, Kwame Owino an economist from the IEA, said there needs to be a major downsizing in the number of conditions implemented by the IMF and their nature.

"Debt vulnerabilities, Covid 19 response, monetary conditions, governance reforms and alignment of government spending with revenues, among 36 other oppressive conditions is what IMF has implemented on Kenya's debt programme," he said.

These conditions were raised from 21 in 2021 to 36 in 2024 further causing oppression to the country.

Owino said that Kenya needs an IMF programme that is resilient to rising challenges, adaptive to monetary conditions and a front-loaded fiscal adjustment.

Economist Peter Doyle, said IMF's oppressive conditions have led to tax rises, revenue source increments and ultimately anti-government protests.

"Due to the harsh conditions, the majority of low-income earners are unable to acquire necessities due to increased prices as a result of difficult economic times which have ultimately led to anti-government demonstrations," he said.

He broke down how the IMF has concealed crucial strategic decisions and parameters related to the terms of its conditions to Kenya.

Doyle explained that the IMF overestimated the country's growth prospectus which ultimately led to the government implementing ambitious strategies to achieve IMF's conditions in the programme.

He said that the IMF needs to establish a programme that is resilient to rising global challenges and adapts to favourable monetary conditions.

Maureen Barasa also from the IEA, spelt out that the IMF should consider discontinuing lending to Kenya and also possibly propose a debt write-off.

Additionally, she said that the IMF and any of its possible successors should stop concealing crucial strategic decisions and parameters to its debtors to increase transparency.

She said the current part of social unrest in the country is due to the IMF's failure to reconsider some of its conditions and make adjustments with relevance to prevailing conditions and situations.

Charles Abugre another economist advocated for a public debt audit which will help in understanding the terms under which public debt was achieved and how the government implemented the debt.