Major shareholders at the International Monetary Fund (IMF) are urging Kenya to request an IMF assessment to address corruption and governance challenges.
This push aims to unlock the disbursement of about $600 million in stalled funds. The delay stems from the Kenyan government's decision to withdraw $2.7 billion in tax hikes following mass protests, which led to the deaths of over 50 people.
The protests highlighted concerns about corruption and poor governance, with many young Kenyans expressing frustration that their taxes were being used to finance politicians' lavish lifestyles.
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Western governments have been pressing Kenya to conduct a governance diagnostic to assess vulnerabilities and corruption-related issues. However, this assessment can only proceed if the Kenyan government formally requests it.
The IMF has indicated its willingness to support such an initiative, stating that it has encouraged Kenya to consider a governance diagnostic in the past.
According to sources, this assessment would pinpoint areas of financial mismanagement and recommend reform strategies. The IMF has conducted similar assessments for 14 countries since 2014, including Ukraine, Sri Lanka, and Cameroon.
Kenya is now searching for alternative ways to raise revenue after shelving the previous tax increases. Finance Minister John Mbadi has hinted at restoring some of the scrapped tax measures while seeking public input on new revenue-boosting legislation.
To receive further IMF support, Kenya must present a credible plan to reduce its fiscal deficit.
Diplomatic sources emphasize that the IMF is unlikely to release more funds without a robust fiscal strategy from the Kenyan government, making governance reforms crucial to future financial aid.
