IMF’s thumbs-up to Treasury’s efforts in stabilising economy
06 November 2015, 10:53
Nairobi - The International Monetary Fund (IMF) has welcomed austerity measures by the National Treasury aimed at restoring stability in the country’s finances.
IMF Kenya representative Armando Morales, who had two weeks ago warned that the Government would prioritise critical spending and cut non-essential expenditure, said the austerity measures announced recently would steer the country back to stability if properly enforced.
“They (measures that have been announced) are exactly what will improve the country’s fiscal position to a point of sustainability and that is good news,” Mr Morales said in Nairobi.
On October 19, National Treasury Cabinet Secretary Mr Henry Rotich announced that Treasury would cut back on non-crucial budget allocations in key state departments, freeze non-essential spending and also push the tax man to enhance tax collection. “We are reviewing the budget to ensure that all expenditures are first productive. We will obviously do that so that we can achieve less borrowing in the market,” Mr Rotich said while announcing the measures.
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Mr Morales now says austerity measures will put the economy on the right path to recovery. The Kenyan economy is expected to grow at 5.5 per cent in 2015, an improvement over the 2014 growth rate of 5.3 per cent. In 2016 it is projected to be 5.7 per cent.
As part of resource mobilization, Mr Rotich said the Kenya Revenue Authority, (KRA) has been tasked to come up with additional measures to improve the collection of Value Added Tax, income and customs taxes, all of which declined significantly at the start of the financial year 2015/2016.
While appearing before Parliament on Friday, KRA Commissioner General Mr John Njiraini confirmed that the tax agency missed its first quarter target by as much as Ksh28 billion, fuelling the cash crisis in Government.
On Friday both Mr Rotich and the KRA boss outlined several measures they said would enhance revenue collection. They include tackling tax evasion and corruption by KRA staffers through the installation of a web-based comprehensive intelligence gathering platform which Mr Njiraini said goes beyond the normal installation of corruption reporting hotlines which have existed for over 10 years.
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