The International Monetary Fund (IMF) has warned Kenyans protesting their loans to the government on the risk of job cuts, tax increases and expensive loans without its assistance.
The IMF released a statement following public outcry over the government’s growing appetite for debt after it approved a $2.34 billion (about Sh257 billion) loan to Kenya.
IMF said its action to loan Kenya has saved the country from a debt crisis in the mid of the Covid-19 pandemic.
The IMF said the loan would help Kenya tackle Covid-19 in the short run and in the long run by replacing expensive bank loans from elsewhere.
“The arrangements with the IMF — together with additional financing from development partners and capital markets and G-20 support under the Debt Service Suspension Initiative (DSSI) — will help meet Kenya’s significant medium-term financing needs including to support their Covid-19 response. The alternative to this financing is much sharper fiscal consolidation or much more expensive borrowing on commercial terms,” the IMF said in a frequently asked questions on Kenya.
The pandemic has hit Kenya’s revenues and limited access to commercial loan markets, forcing the country to turn to the World Bank and the IMF seeking direct budgetary financing.
Last year, Kenya borrowed Sh79.3 billion from the IMF and has now taken Sh257 billion under the current programme.
The pandemic only tipped the scales for the country that was headed to a debt crisis after President Uhuru Kenyatta’s Jubilee administration borrowed at least Sh6.1 trillion to implement his manifesto in 10 years in power having inherited slightly more than Sh1.79 trillion in June 2013.
Additional report from Business Daily.