Kenyan President William Ruto said on Friday that he would make changes to the government soon, after weeks of nationwide protests that started as online anger over tax hikes and culminated in the violent storming of parliament.
The protests prompted Ruto to withdraw the finance bill that contained the proposed tax hikes, leaving a 346 billion shilling($2.7 billion) hole in the budget for the fiscal year that started on July 1.
Kenyan President Ruto said in an address to the nation on Friday that his government would cut spending by 177 billion shillings in the fiscal year that started in July, with the additional amount that needs to be raised covered by increased borrowing.
He also phoned IMF Chief Kristalina Georgieva since the tax increases was part of his commitment for a $3.6 billion lending programme. The programme had not been approved by the IMF’s Executive Board.
Analysts say Kenya will now miss key programme targets although the government does not need cash from the IMF since it was able to repay a bond.
The IMF was a major target for protestors, who accused it of being the driving force behind the proposed tax hikes.
Other reports said there was agreement among major donors that the IMF needed to show flexibility in its programme targets as Kenya looked to fill the gap caused by the withdrawal of tax hikes.
Reports said the government should crackdown on corruption and increase accountability in exchange for flexibility.
An IMF spokesman said “We remain deeply concerned by the recent tragic events in Kenya and maintain close, ongoing and constructive dialogue with the Kenyan authorities.”
The IMF said the main goal was to help Kenya overcome its economic challenges and improve its people’s well being.
“I think the IMF will continue helping Kenya but the disbursements are most likely to resume towards the end of the year,” said Pavel Mamai at Promeritum Investment Management . “The IMF will basically ask Kenya to regroup and present a new reform plan.”
With Reuters inputs
