Ex-IMF economist says Fund’s targets on Kenya unrealistic


Economy

Ex-IMF economist says Fund’s targets on Kenya unrealistic


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Kenyans are choking on taxes over unrealistic revenue targets IMF is attaching to its loans to the country. FILE PHOTO | POOL

A former senior economist at the International Monetary Fund (IMF) now says Kenyans are choking on taxes over unrealistic revenue targets the institution is attaching to its loans to the country.

Peter Doyle, who quit IMF in 2012 after two decades and now serves as an independent research economist with focus on international macroeconomics, said in a recent forum on Africa’s debt crisis that while Kenya has “tried very hard” not to default on debts, citizens are paying a steep price through a series of new taxes.

“Kenya has tried very hard to avoid default. But in doing so, the IMF has steadily increased the medium-term primary balance target that Kenya has to hit, which explains why every Kenyan tax is going up and up,” said Doyle.

He was speaking during a three-day conference themed The African Debt Crisis and International Financial Architecture that concluded last week in Accra, Ghana. It was convened by Economics under the International Development Economics Associates Limited (IDEAs).

The primary balance is the difference between the government’s revenue and its spending, excluding what it uses on debt payments.

Treasury data shows Kenya is expecting to close the financial year ending June 2024 with a deficit of Sh832.3 billion or 5.2 percent of GDP. It targets to lower this to Sh753.2 billion or 4.2 percent of GDP in the 2024/25 financial year and reduce it further to Sh719.9 billion or 3.6 percent of GDP in the following year.

Kenya in July rolled out a raft of new taxes including doubling value-added tax on fuel and introduction of a 1.5 percent housing levy on gross pay. The State is also aggressively going for the informal sector in an attempt to grow taxes.

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