IMF demands better use of ‘new’ funds from Kenya

Saturday May 16 2020

A health worker takes a sample from a truck driver undergoing a test for Covid-19 on May 14, 2020. PHOTO | BRIAN ONGORO | NMG

A health worker takes a sample from a truck driver undergoing a test for Covid-19 on May 14, 2020. PHOTO | BRIAN ONGORO | AFP 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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The International Monetary Fund (IMF) has called for transparency in the spending of Covid-19 response funds in Kenya amid rising concerns of misappropriations of millions of shillings.

The IMF, in a detailed assessment of Kenya’s economy published this week, reckons that Nairobi must enhance transparency in the utilisation of these funds to ensure they are being spent on combating the virus that has so far infected 781 Kenyans and caused 45 deaths.

The Bretton-Woods institution says corruption, misuse and lack of transparency in the spending of Covid-19 funds risks compromising Kenya’s efforts to tackle the pandemic.

Nairobi has so far raised about $1.5 billion from various development partners to fight the pandemic including receiving $739 million from the IMF, $50 million from the World Bank and $6.6 million from the US government.

The Kenyan government has also mobilised about $20 million from private sector firms and rich individuals through the Covid-19 Emergency Response Fund.

The Treasury has also provided for $372 million more debt in the 2020/21 budget and has approached institutions such the African Development Bank for more assistance.
“The authorities should undertake independent audits of samples of crisis mitigation spending and publish the results of these audits,” states the IMF report.

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It adds that the government should also publish documentation on related procurement contracts together with the ex-post validation of delivery along with the name of awarded companies and their beneficial owners.

“Once the crisis abates, the authorities should introduce legislation to improve their capacity to detect illicit enrichment and to address conflicts of interests in line with international best practices,” notes the IMF.

Escaping scrutiny

Mandarins at Kenya’s Ministry of Health have been on the receiving end over allegations of misuse of $12.2 million from the World Bank including spending $390,649 to lease ambulances, $651,082 on communication and $37,204 on tea and snacks.

Notably, Kenya is yet to appoint an auditor general since the exit of Edward Ouko in August last year, raising eyebrows that the government is less committed to fill the vacant office to escape scrutiny.

Kenya faces an uncertain wait before the IMF board approves a $1.5 billion standby credit facility designed to protect the Kenyan shilling against external shocks and raise the country’s credibility in the eyes of international lenders.

“Discussions on a precautionary fund-supported arrangement would take additional time to conclude given the current uncertainty regarding the duration and scale of the Covid-19 impact,” it noted.

Though Kenya is amassing new massive debts to fight the pandemic, the IMF is confident of the country’s ability to repay.

IMF observes that plans by the Kenyan government to return to a fiscal consolidation path after the current Covid-19 crisis abates will reduce debt-related risks.
Kenya’s stock of public debt currently stands at $60.3 billion, with the country’s IMF loans standing at $960 million.

“Given the likelihood of continued access to concessional financing in such a scenario and in light of Kenya’s strong track record of servicing debt to the fund and other creditors, Kenya’s capacity to repay the fund would remain adequate,” says the IMF.

The Bretton-Woods institution projects Kenya’s gross domestic product growth for 2020 will drop to 0.8 per cent from 5.4 per cent recorded last year due to the impacts of the pandemic.

It has so far ravaged key sectors such as tourism, agriculture, manufacturing and drastically reduced remittances and foreign direct investments.

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