In a significant development, Western countries have urged Kenya to consider an assessment of governance and corruption issues by the International Monetary Fund (IMF) as part of efforts to unlock the funding that has stalled, according to Reuters.
The release of Ksh77.5 billion (US$600 million) by the IMF has been held up because of the Kenyan government’s withdrawal of tax hikes after the GenZ-led protests.
The mass protests revealed the issues of misgovernance and corruption, with many Kenyans expressing displeasure at the politician’s display of lavish lifestyles.
Diplomatic sources told Reuters that Western governments allied to the IMF have been encouraging Kenyan authorities to conduct an IMF assessment and governance diagnostic of governance and corruption vulnerabilities.
The assessment would reveal where the leaks, challenges, and problems are and propose appropriate responses. It would give the Kenyan government an opportunity to obtain additional IMF support.
Kenya’s finance ministry did not respond to requests for comment. A governance diagnostic request would facilitate discussions about further IMF support.
The request for the diagnostic assessment is a direct blow to the cash-strained government, which needs to get external funding to tackle transparency issues.
The review of governance and graft issues stands in the way of Kenya’s effort to secure the much-needed funds to fill the budgetary constraints. Without submitting to the audit, Kenya risks losing out on financial support from the IMF. The move could also jeopardize the government’s credibility with other external lenders.
Kenya’s continued standoff with the IMF has led the government to seek alternative funding options. The government is reportedly closing in on a deal with UAE for a high-interest Ksh193 billion loan.
Read more: Kenya Joins Asian Infrastructure Investment Bank (AIIB), Eyes Concessional Funding
