IMF chief’s visit turns international focus on Kenya

 The IMF managing director Christine Lagarde at a past event. Photo/AFP
The IMF managing director Christine Lagarde at a past event. Photo/AFP 

Kenya’s economic management credentials are set to come under sharp focus as IMF managing director Christine Lagarde visits Nairobi this week.

This comes ahead of a planned negotiation for a new round of financing from the international lender as well as the anticipated Sh172 billion ($2 billion) Eurobond issue by the Treasury.

Kenya has just completed drawing down a Sh65 billion ($750 million) International Monetary Fund (IMF) three-year foreign currency support loan facility. The next round of financing arrangement is set for negotiations during the first three months of this year.

The IMF is keen on helping Kenya to achieve recently set East African Community Monetary Union targets.

Under the monetary union protocol to be effective by 2024, the Central Bank of Kenya will be required to raise the amount of import cover from the current 4.2 months to 4.5 months and keep inflation at no more than eight per cent.

Ms Lagarde will meet policy makers and the civil society.

“I am very much looking forward to my visit to underline the fund’s strong partnership with Kenya, one of the most dynamic economies in a region that has been a bright spot in the global economy,” Ms Lagarde, who arrived in Nairobi on Sunday, said ahead of her trip.

Ms Lagarde has previously visited Côte d’Ivoire, Malawi, Niger, Nigeria, and South Africa in Sub-Saharan Africa.

“Kenya has emerged as one of Africa’s frontier economies and I am very interested in learning how the country’s leaders and people will build on this success moving forward,” said the IMF head.

Ms Lagarde will hold talks with President Uhuru Kenyatta and members of his Cabinet. She will also meet parliamentarians as well as women and civil society leaders and deliver a speech to private sector leaders.

The last time an IMF head visited Kenya was in 2010 when Dominique Strauss-Kahn visited, a year before he was forced out of office over allegations of rape for which he was later cleared.

Ms Lagarde will participate in a debate to be held at the Sarova Stanley Hotel on Monday. The debate will be hosted by Aly-Khan Satchu, who heads data vending and investment advisory firm Rich Management in Nairobi and who first announced the imminent visit.

“The IMF is set to give the Government of Kenya the seal of monetary and fiscal approval ahead of the imminent issue of our sovereign Eurobond as early as this month,” said Mr Khan.

Ms Lagarde also comes to Kenya when the Treasury and CBK have committed themselves to gradually adopting a rigid inflation containment programme, despite the implications for economic growth and employment.

Some analysts say that Kenya should not follow the IMF prescription for such rigid inflation targeting monetary regime as it may not help in solving the biting issue of youth unemployment.

“I believe inflation is a tax on the poor and therefore that inflation needs to be contained. Of course, employment is the issue. Sound macro policy sets the right landscape for entrepreneurs and the private sector to do what they know best, create businesses that create jobs,” said Mr Khan.

It is still unclear as to what amount the IMF will give to Kenya for the next programme.

“I expect the IMF to remain a trusted partner to Kenya and that the IMF will step up and remain a major player in financing Kenya’s lumpy forward infrastructure spend,” said Mr Khan.