Francis Atwoli, Secretary General of the Central Organisation of Trade Unions (COTU-K), has sent a strong caution to John Mbadi, the recently appointed Treasury Cabinet Secretary, asking him to proceed cautiously when interacting with the International Monetary Fund (IMF).
Atwoli issued a warning, stating that mindlessly adhering to IMF recommendations could put Kenya in danger and make things worse financially for regular Kenyans.
This warning came after a conversation between Mbadi and Selim Cakir, the IMF Representative in Kenya, on Wednesday, August 14. The Ministry of Finance and National Treasury verified that the discussion took place ahead of the planned IMF payment of more than Ksh181 billion on X.
Atwoli claims that there are conditions tied to this monetary infusion, and that these requirements could have disastrous effects on the nation’s economy.
Noting that “following the IMF’s advice without scrutiny has led to adverse effects on the citizenry and workers,” Atwoli cited historical parallels.
He made comparisons to the administration of previous President Mwai Kibaki, who cautiously considered IMF proposals while weighing their implications for Kenyan residents’ wellbeing.
According to Atwoli, a well-rounded strategy is required to keep economic policies from burdening the populace.
The seasoned trade unionist continued by warning that IMF conditionalities frequently include severe spending cuts, such as higher taxes, and that these policies could lead to widespread civil unrest.
“IMF conditionalities frequently entail actions that impose excessive financial burdens on the populace, mainly through higher taxes and purported austerity measures,” Atwoli said.
He issued a warning, saying that in addition to causing social instability, these activities also spark protests as people struggle with the consequences for their livelihoods.
Atwoli sent a strong message to Mbadi, advising the incoming Treasury CS to approach IMF conditionalities cautiously and with a thorough grasp of how they would affect regular Kenyans.
“The further we distance ourselves from the IMF and its allies, the better for this country,” he emphasised.
Atwoli has been loud in his criticism of the IMF, but he has said nothing about Mbadi’s more comprehensive economic changes, notably the CS’s proposals to reduce the size of the government’s bloated payroll and implement tax reforms.
These changes are part of a larger initiative to reduce spending and strengthen public finances, which is crucial for a nation that has seen fatal protests throughout the past two months.
Given its severe budget deficits, Kenya is under pressure to increase revenue collection in order to meet IMF requirements for a financing program, given the stark budget deficits it faces.
By saying reform opponents must “give way.” Mbadi has made his goals clear.
This includes a protracted endeavour to integrate government payrolls with digital systems in order to get rid of retirees and ghost workers.
Mbadi further declared that the tax collection agency, the Kenya Revenue Authority (KRA), will expedite changes. He underscored the potential for a significant increase in revenue collection, highlighting that a mere 3% increase in the revenue-to-GDP ratio could yield an additional Ksh400 billion.
Carrying on from his predecessor’s tax amnesty program, Mbadi said Ksh43 billion had been made so far. The policy spares people who pay past-due taxes from penalties.
He believes that this policy is necessary in order to meet the IMF’s strict standards and stabilize the country’s finances.
