Kenyan budget office sends warning signal over IMF targets

By Herald Aloo
Posted on Monday, 20 June 2022 16:28

Ukur Yatani outside the National Treasury building with the budget briefcase before leaving for Parliament to read the 2020-21 budget. Credit: Dennis Sigwe

Kenya runs a risk of breaching targets agreed with the International Monetary Fund (IMF), the country’s parliamentary budget office (PBO) has warned, citing a bulging fiscal deficit.

In its review of the 2022-23 budget published in May, the PBO raises concern that the fiscal deficit has gone “above the agreed levels over the medium term” with the IMF. “The expenditure increase that has necessitated expansion of the deficit is mostly in recurrent rather than development expenditure,” says the report by PBO, an advisory unit to lawmakers.

Kenya has been on a 38-month finance programme with the IMF since April 2021 which allows access to credit of $2.34b on condition that expenditure is kept under a tight rein and debt is cut. The country’s recurrent expenditure has been on an upward trend for the past five years, accounting for about 50% of the total budget for 2022-23.