IMF role revealed

Reports from Washington reveal that Americans are scrambling to use the World Bank and the International Monetary Fund (IMF) to whip developing nations into abandoning huge infrastructure projects financed by China.

The US lawmakers intend to do this by leaning on the IMF to bail out indebted countries only under terms that prevent them from continuing with existing projects or starting new ones.

This may explain why the Bretton Woods institutions require countries in need support to institute measures that may be unpopular with the electorate.

In the Kenyan context, IMF’s insistence that a 16 per cent in value-added tax (VAT) be slapped on petroleum products could mean that Washington is willing to stoke the embers of local public anger that will force Nairobi to re-think its China policy.

None of this absolves China from accusations that it is taking advantage of Kenya’s or Africa’s huge appetite for development.

This appetite is a result of the continent’s move get out of its cycle of poverty where its natural and human resources were used to develop Europe and America.

The tragedy is that Kenya and will face woes from Chinese loans unless they change tact fast.

The good news is that the country has recognised this reality - explained by the speed at which the State is prosecuting the war against corruption. The Director of Criminal Investigations George Kinoti said Kenya may have lost Sh100 billion in the first six months to tax evasion and sale of substandard goods.

Petroleum products

This amount is enough to plug the budget hole that Treasury CS Henry Rotich intends to close with the introduction of VAT on petroleum products.

This was DCI’s estimate after a preliminary audit of the goings-on at the Mombasa Port. A forensic audit of the entire Kenya Revenue Authority (KRA) operations could reveal huge losses that might even be enough to finance the entire national budget.

This must be accompanied by audits at ministries and agencies as well. Institute of Economic Affairs report last month showed that 88 per cent of all ministries, agencies, and departments failed to produce receipts and invoices for goods purchased during the 2015/2016 financial year.

The result is that a huge part of the Sh2.5 trillion total budgetary allocations for the State expenditure in the 2013/14, 2014/2015 and 2015/16 financial years may have been stolen or misappropriated. This calls for an audit of the budget to see areas to cut.