IMF meets MPs amid calls for increased accountability

By James Anyanzwa  

The International Monetary Fund (IMF) mission on Tuesday held marathon meetings with MPs as the Bretton woods institution began its appraisal of the country¡¯s level of fitness for the third round of funding.

The closed door meeting with the Finance Committee of Parliament centred on critical issues, including interest rates, burgeoning public debt, and the level of transparency and accountability in the management of public funds.

Sources said the team was queried by an MP who wanted to know why the institution continues to lend to Kenya while it was not concerned with the high level of corruption, which has made Kenyans pay for projects that never kicked off.

Phantom projects

Some of the phantom projects are the Anglo Leasing Forensic Laboratory, and the Sh5.1 billion Ken-Ren Chemical and Fertiliser Company in Changamwe.

The IMF team, however, noted that it was upon Kenyans to hold their Government accountable for any loss or misuse of public funds though they expressed willingness to carry out a forensic audit on the Government¡¯s previous debts.

The IMF team explained its engagement with the Government, but sharply differed with MPs on issues of interest rates and their attempts to put a ceiling on commercial banks¡¯ lending rates.

The team noted that the cost of living as measured by the general rise in the prices of goods and services (inflation) is dropping and the economy is on the recovery path ¨C developments that discount the no need to cap interest rates.

"This line of thought did not go down well with a section of MPs who had been pushing for a bill to cap interest rates," said source.

The mission noted that the Fund was generally satisfied with the country¡¯s macro-economic progress, saying growth remains relatively strong at five per cent and inflation was coming down.

The Fund, however, noted that the Eurozone crisis did not significantly affect Kenya.

Gem MP Jakoyo Midiwo, who is also a member of the Parliamentary Committee on Finance on Tuesday, confirmed to the House that IMF had said the Eurozone crisis did not significantly affect the country.

According to the source, IMF agreed with Government on several economic reforms such as Public Financial Management Bill and the Value Added Tax Bill 2011.

The IMF mission arrived in Nairobi last week to carry out a third review of the country¡¯s economic performance under a three-year Extended Credit Facility (ECF) arrangement.

The IMF Executive Board had on January 31 last year approved Sh63 billion ($760 million) credit facility for Kenya.

The IMF team plans to hold meetings with senior Government officials, the civil society, and members of the private sector and review the recent economic developments.

The review will be completed on March 12 and pave way for the third disbursement.

So far, the Fund¡¯s total disbursements under the ECF arrangement amounts about Sh26 billion.

¡¡