EDITORIAL: IMF gesture is timely but Treasury must do more

National Treasury
The National Treasury building in Nairobi. FILE PHOTO \ NMG 

While it has all along been thought that the current coronavirus would end up in an economic disaster, it is now almost certain.

That is why Kenyan policymakers no longer have an excuse for not acting on the pandemic like everyone is doing globally. To be sure, the government is partly acting on the virus despite a lot of hard-to-please Kenyans being even more sceptical.

Besides physical measures taken to slow down the spread of the virus, Central Bank of Kenya (CBK) has led the way in helping stimulate the economy.

Among the most fundamental measures is cutting the bank’s cash reserve ratio by a percentage that translates to Sh35 billion being injected in the economy.

This will mean bankers that fail to lend will be holding expensive cash while others will make income from this.


On top, CBK has cut its policy rate and asked banks to extend personal loan tenors by a year.

Up to now missing in action has been the Treasury. That is until the CBK announced the Bretton Woods would be chipping in with rescue loans amounting to Sh123 billion.

Especially of note is that the International Monetary Fund, better known for the balance of payments support, will also be funding the budget mitigating measures. It will be noted that the fund currently has no programme with Kenya after a fallout — that seems to have opened floodgates for dubious debt procurement — and thus the zero-interest debt will not have what in the parlance of the Washington DC-headquartered multilateral is called conditionalities.

We are hopeful that this will not signal mismanagement of resources but will embolden the current crackdown on theft of government resources.

Further, we advise the Treasury to relook at its debt obligations to preclude the possibility of coronavirus-inspired default.

While it will be catastrophic to think of delaying Eurobond payments in May, there is a need to engage the Chinese on the standard gauge railway payments because of what might shape up as force de majeure (emergency).

The debt management should come together with fiscal incentives — a dicey area given that the economy was on its back well before the advent of the virus — in a way that balances revenue collection and survival of the ordinary Kenyan.

The Treasury has to immediately take leadership and act.