Kenya: IMF sets new loan conditions, limiting choices of next government

By Herald Aloo
Posted on Saturday, 6 August 2022 00:30

A shop owner hold bags depicting presidential candidate Raila Odinga of the Azimio la Umoja (Declaration of Unity) coalition and William Ruto, Kenyan deputy president and presidential candidate for the United Democratic Alliance (UDA) and Kenya Kwanza political coalition, in the town of Kibigori, Kisumu county, Kenya 30 July 2022. REUTERS/Baz Ratner

The International Monetary Fund (IMF) has based its loan to Kenya on three new conditions, which do not match the populist approach of the leading presidential aspirants - signalling a potential conflict between the multilateral institution and Kenya's new government.

These three conditions, known as structural benchmarks, include implementation of national tax policy, scrapping fuel subsidies and a push for Kenya Power to fully bridge its fiscal gap by 2023.

These are fresh conditions added to the 38-month $2.34bn (KSh276bn) loan deal Kenya signed in April 2021 under the special drawing rights (SDR) that is currently being settles in tranches and will spill over to the next administration.