The International Monetary Fund (IMF) has asked Kenya to stay the course of its economic reforms so as not to erode the confidence of investors.
The multilateral lender says Kenya should stick to the market and rules-based economy reforms since dithering would hurt the forex market.
A ‘market and rules-based economy’ is a free market concept where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system.
As part of a deal with IMF, the government is implementing measures to demonstrate its commitment to the reforms, including scrapping subsidies on key items such as fuel and electricity despite the public uproar.
The IMF policies, which are sound and backed by international best practices, are critical to ensuring Kenya mobilises the funds it requires to run its operations and reduce the risk of debt distress and default.
As Kenya implements the policies, it is important to also pay attention to the unintended consequences that include high cost of living through high taxation. It is also very disturbing that cutting government wastage is not on top of the conditions by the IMF under the loan programme.
It is important that before the next batch of loans is disbursed, the Ruto administration should provide verifiable data on how the government is cutting wastage on unnecessary travel and duplicity in government.
A good place to start for the IMF is to look at the recent revelations from the Controller of Budget.