Global aid agency warns Ruto against IMF deal as part of loan conditions
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Global aid agency, Oxfam warns Ruto of job losses if he implements IMF deal as part of loan conditions
Global aid agency, Oxfam warns Ruto of job losses if he implements IMF deal as part of loan conditions.
The International Monetary Fund (IMF) is pushing for retrenchment as part of loan conditions, but global relief organization Oxfam has warned President William Ruto’s administration that doing so will aggravate the nation’s economic position.
The efficiency of the IMF-mandated programs in 17 low- and middle-income countries was questioned by Oxfam in a report titled “IMF Social Spending Floors: A fig leaf for Austerity.”
Ruto’s government agreed to limit the rise of the public sector wage bill, including salaries, as one of the requirements. According to Oxfam, this would result in job loss.
“Indicatively, spending on wages and salaries was expected to drop from 4.3 percent of the Gross Domestic Product (GDP) in 2020/21 to 3.7 percent by 2022/23. 70 Such cuts occurred amid intense pressure on the health system in the aftermath of the pandemic and on public education due to comprehensive reforms,” the statement read in part.
Owing to these parameters, the country’s 2022/23 budget revealed huge declines in the financing of different ministries including the Ministry of Health, State Department for Early Learning and Basic Education, State Department for Social Protection, Senior Citizens Affairs and Special Programmes, and State Department for Gender.
Other policies to be enforced included the scrapping of subsidies for maize and fuel, budget cuts, and tax increase in a bid to raise revenue and lower public expenditure.
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Under the IMF conditions, the government was required to restructure state-owned enterprises, which comprised the higher education sector.
This detailed that universities risked harmful cuts despite the number of students expected to increase in the coming years.
To plug this fiscal gap, the government considered various measures such as increasing tuition fees or only providing financial support to students from underprivileged backgrounds.
Thus, in its attempt to meet IMF-mandated fiscal consolidation measures, the Kenyan Government would institute cuts to public higher education.
The news came as Central Bank of Kenya (CBK) Governor Patrick Njoroge affirmed that the government is in talks to acquire Ksh162 billion from IMF and World Bank for budgetary support.
“We are not very worried because we have significant inflows coming in,” Njoroge stated during a recent interview on Reuters.
As of January 2023, Kenya’s public debt stands at Ksh9.1 trillion.
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