‘Kenya Risks Economic Chaos’ – Atwoli Warns CS Mbadi About IMF’s Hold
Francis Atwoli, Secretary General of the Central Organization of Trade Unions (COTU-K), has issued a stark warning to John Mbadi, the newly appointed Treasury Cabinet Secretary.
Atwoli urged him to tread carefully when dealing with the International Monetary Fund (IMF).
Atwoli warned that blindly following IMF advice could send Kenya down a dangerous path, exacerbating the financial strain on ordinary citizens.
This warning came following a meeting on Wednesday, August 14, between Mbadi and Selim Cakir, the IMF Representative in Kenya.
The meeting, confirmed by the Ministry of Finance and National Treasury on X, took place ahead of the IMF’s anticipated disbursement of more than Ksh181 billion.
NEW TREASURY CABINET SECRETARY, HON. JOHN MBADI, SHOULD NOT IMPLEMENT IMF CONDITIONALITIES BLINDLY
— Francis Atwoli NOM (DZA), CBS, EBS, MBS. (@AtwoliDza) August 14, 2024
The Central Organization of Trade Unions (Kenya), COTU (K) wishes to strongly caution the new National Treasury Cabinet Secretary, Hon. John Mbadi, over the potential implications… pic.twitter.com/B0caeZLdbN
According to Atwoli, this financial injection comes with conditions, and the consequences could be disastrous for the country’s economy.
“Following the IMF’s advice without scrutiny has led to adverse effects on the citizenry and workers,” said Atwoli pointing to the historical precedents.
He drew parallels with the regime of former President Mwai Kibaki, who approached IMF recommendations with caution, weighing them against the welfare of Kenyans.
Atwoli argued that a balanced approach is required to keep economic policies from becoming a burden on the population.
The veteran trade unionist also warned that IMF conditionalities frequently include harsh austerity measures, such as increased taxation, which could spark widespread social unrest.
“IMF conditionalities often involve measures that place undue financial strain on the citizenry, primarily through increased taxation and so-called austerity measures,” Atwoli stated.
He warned that these actions not only cause social unrest but also spark protests as citizens deal with the negative effects on their livelihoods.
In a strong message to Mbadi, Atwoli advised the new Treasury Secretary to approach IMF conditions with caution and a thorough understanding of their potential impact on ordinary Kenyans.
He emphasised, “The far we stay away from the IMF and its accomplices, the better for this country.”
Despite his vocal criticism of the IMF, Atwoli has been silent on Mbadi’s broader economic reforms, particularly the CS’s plans to clean up the government’s bloated payroll and implement tax reforms.
These reforms are part of a larger effort to reduce spending and strengthen the government’s finances—an important issue in a country rocked by deadly protests over the last two months.
Kenya is facing massive budget deficits and is under pressure to increase revenue collection in order to meet IMF lending programme conditions.
Mbadi has been clear about his intentions, stating that anyone impeding reform efforts must “give way.”
This includes a long-awaited project to connect government payrolls to technology systems, with the goal of eliminating ghost workers and pensions.
Mbadi also announced plans to accelerate reforms at the Kenya Revenue Authority (KRA), which collects taxes.
He emphasized the potential for a significant increase in revenue collection, stating that raising the revenue-to-GDP ratio by just 3% could generate an additional Ksh400 billion.
Continuing his predecessor’s tax amnesty program, Mbadi stated that the initiative, which exempts those who pay overdue taxes from penalties, has already raised Ksh43 billion.
This strategy, he believes, is critical to stabilising the country’s finances and meeting the IMF’s stringent requirements.
‘Kenya Risks Economic Chaos’ – Atwoli Warns CS Mbadi About IMF’s Hold
