IMF board to convene on Kenya loan plan
The executive board of the International Monetary Fund (IMF) will meet on Friday, December 17, to decide on wiring Kes29.7 billion worth of loan to Nairobi and review the progress of agreed structural reforms.
The board will also review Article IV- an analysis of Kenya’s economy that was stopped in 2018 when the country fell out with the multilateral lender over conditions to get a stand-by facility to support the shilling.
IMF said the meeting on December 17 is to consider the staff report covering the 2021 Article IV Consultation as well as the second review of the EFF/ECF program.
Kenya would have access to about $264 million in financing once the review is formally completed by the IMF executive board.
This brings the total IMF financial support advanced to Kenya this year to roughly Kes110.7 billion ($984 million).
Kenya has fulfilled most of IMF demands including resuming VAT, income tax, and corporate tax that was axed during the Covid-19 pandemic as well as the introduction of digital tax and charge of 16 percent VAT on cooking gas.
The country has, however, failed to deliver on minimum tax promise after the courts threw out the tax proposal citing illegalities.
Read also: Taxman back to the drawing board as court torpedoes Sh20 billion minimum tax plan
In September, High Court Judge George Odunga declared the provisions of the minimum tax, calculated at one percent of a business’s annual sales, as unconstitutional and the tax guidelines void
“The authorities have appealed the suspension of the corporate minimum tax, which they consider an important element of their strategy for multiyear fiscal consolidation centered on tax revenue mobilization and careful expenditure control,” said Mary Goodman who led the IMF mission.
The IMF-induced taxes have led to an increase in inflation especially LPG gas and mobile services tax that has hit households hard.
The multilateral lender’s reforms on the state-owned companies are also expected to lead to job losses as parastatals and universities are merged, collapsed, or sold to save on state expenses.
