Why IMF policies cannot align with bottom-up agenda

International Monetary Fund debt concept. The lender is often the last resort. [iStockphoto]

It is no longer news that Kenya is at the mercy of international lenders, and more specifically, the International Monetary Fund.

It is something that has been pondered and debated over and over again whenever the government comes in with tax policies completely out of tune with its own manifesto and people’s aspirations.

On paper, the IMF is the saviour, lender of last resort that comes to salvage situations where all others have shied away.

On that account, its usefulness cannot be downplayed; that is, if you decide to take a more positive angle. According to government advisors, the alternative to IMF intervention was a default on loan obligations. However, going for a lender of last resort comes with its consequences.

To put this into proper perspective, if you have a regular income and a good credit score, it is always easy to get affordable loans with minimal conditions and constraints. However, when your score is in question and you cannot access them, and yet you seriously need money, your point of call becomes the shylock. What you could get at 10 per cent, you get at 30 per cent, and with extremely stringent conditions.

In the long run, you become a slave to the lender. This may sound hypothetical, but it is the reality for many businesses. People have lost the little they have chasing quick fixes to their liquidity problem.

Similarly, Kenya’s history of heavy borrowing without any meaningful impact on the economy is the reason we can no longer choose who comes to bail us out and with what conditions.

However, it becomes a problem when you consider the ‘hustler’ narrative with which the current administration rode to power and the beautifully coined BETA policy that followed. Hustler policy cannot survive in an environment where lender restrictions and conditions are at play. 

That is where government officials find it appropriate to allegorise the tough conditions caused by imposed policy with the state of sickness, where one has to endure painful injections and bitter pills to get well. This could be something worth holding on to were it not for the poor history of similar interventions.

In places such as Mexico in 1995, the number of people in extreme poverty increased from 21 to 37 per cent as the administration struggled to meet conditions for a US-arranged $50 billion bailout.

In Kenya, we have our own history with the Structural Adjustment Programmes. The IMF was associated with collapse of several state-funded programmes in healthcare, education, and other social sectors.

As we speak, the Ministry of Education has made public a proposal to do away with a government-sponsored school feeding programme. Whether you like him or not, you can be sure that is not the kind of policy expected of a Ruto government. However, for reasons best explained by his economic advisors, he has found himself on that path. The resultant effect is that the ‘hustler’ will have to wait longer, if not forever, to understand what the Bottom Up Economic Transformation Agenda - BETA means.

-The writer is anchor Radio Maisha


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