Finance Bill 2024: How IMF Pressured Govt to Enforce New Taxes

• The International Monetary Fund (IMF) backed the Finance Bill 2024 and predicted protests against new taxes would erupt
• However, in its assessment, the international lender noted the risk was 'medium', but Gen Z protesters proved them wrong
• The IMF is set to lend Kenya KSh 465 billion in its seventh review of the extended fund facility and extended credit facility arrangements

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TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

Details have now emerged that the International Monetary Fund (IMF) had predicted protests against the Finance Bill 2024, which it backed.

President William Ruto (r) greets IMF MD Kristalina Georgieva. Photo: William Ruto. Source: Twitter

However, the international lender asked the government to stand firm and insisted on the bill's passage.

Why the IMF insisted on Finance Bill 2024's passage

According to Daily Nation, the Bretton Woods institution noted the risk was 'medium', but its assessment was off the mark as thousands of the youth thronged the streets countrywide chanting slogans against it.

The IMF asked President William Ruto's government to remain committed to reforms under its programme as it warned of a shortfall in revenue collection.

"Despite positive developments, a significant shortfall in tax revenue collection and deterioration in the primary fiscal balance in FY2023/24 relative to programme targets is expected to keep domestic borrowing needs elevated. As a result, interest payments have increased, putting pressure on public debt even after the latter benefited from a strengthened shilling.

How much will the IMF lend Kenya?

The IMF said the Finance Bill 2024 was meant to widen the domestic tax base and collect more revenue to finance the 2024/2025 budget.

“A sizable and upfront fiscal adjustment in FY2024/25 will be needed to correct the course. To this end, the authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 budget and the 2024 Finance Bill. Importantly, the latter centres on measures to broaden the domestic tax base," the IMF stated.

The IMF is set to lend the country KSh 465 billion in its seventh review of the extended fund facility and extended credit facility arrangements and the second review under the resilience and sustainability facility.

What IMF said about anti-government protests

• The institution said it stood with Kenya amid anti-government protests that rocked the country.
• Its director of communications, Julie Kozack, said she was concerned about the loss of lives and injuries during the protests.
• Kenyans accused the lender of burdening the government with loans leading to austerity measures that strain taxpayers.