NAIROBI: Kenya’s finance minister nominee is defending the International Monetary Fund’s (IMF) role in supporting the economy for now, but says the country should become more self-reliant by cutting its budget deficit and shifting to cheaper debt.
The East African nation, which has been rocked by anti-tax hikes protests in the last two months which forced President William Ruto to abandon this year’s funding plan, agreed a lending programme with the Washington-based fund in 2021, which has since been expanded and extended.
“The IMF will never invite themselves to a country. We do invite them and agree on a programme,” John Mbadi told a parliamentary vetting panel last Saturday.
He said he did not think Kenya needed to be under an IMF programme for long.
“We must move to a system which we devolve ourselves from the IMF, and start depending on ourselves.”
The country should cut its annual budget deficit to 2.5%-3%, he said. The projected deficit for this financial year, after the withdrawal of the tax hikes, stands at 4.4% of gross domestic product.
Mbadi said he would not support new taxes or increases, if he is confirmed to the role, arguing that the solution is improving efficiency at the tax authority and focusing on areas like customs duties, where the government is losing cash to smugglers and counterfeiters.
Mbadi added the government must reorganise the composition of its public debt in order to manage liabilities more efficiently and “debt accountability” would be his top priority.
“We must restructure our debt,” Mbadi told the lawmakers, referring to the need to shift away from expensive commercial debt and lean on cheaper alternatives.
Commercial debt, priced at an “unsustainable” 8%-9%, made up 23% of Kenya’s external debt, Mbadi said, and his goal would be to cut that to no more than 5%. — Reuters
