Hundreds of mismanaged infrastructure projects have stalled and it will cost the country around $10 billion (Sh1 trillion) to revive them, the IMF said in a report.
The report’s findings point to a growing power struggle at the heart of government.
Amid mounting public anger over ballooning state debt and a series of graft scandals, President Uhuru Kenyatta last Tuesday confirmed acting Treasury Cabinet Secretary Ukur Yatani (pictured) in the post after its previous incumbent, Henry Rotich, was charged with financial misconduct - an accusation he denies.
The government has acknowledged that some past investment projects did not pass muster, and Yatani told a budget preparation meeting last Wednesday available resources would be “dedicated only to projects and programmes that will ensure higher economic and social returns.”
Yatani, an ally of Kenyatta while Rotich was closer to Deputy President William Ruto, has won support from voters since provisionally taking over at the ministry in July. The International Monetary Fund report, published on Wednesday, lays bare the scale of the task Yatani now faces.
It said an estimated 500 projects - around half of the total - had ground to a halt due to “non-payment to contractors, insufficient allocation of funds to projects, and litigation cases in court.” The State would need to raise around Sh1 trillion shillings ($10 billion) to complete them, the report said. Kenya has ramped up public investment projects since 2010.
But that increase “occurred without enough screening for project viability and readiness before they entered the budget,” the IMF said.
“There has been a subsequent squeeze on ongoing projects in the absence of fiscal space, which is now accruing large costs to the government.”