IMF's Early Warning on Finance Bill 2024, What it Said

• The International Monetary Fund (IMF) warned in January that demonstrations could rock Kenya if the Finance Bill 2024 was passed
• However, it asked President William Ruto's government to remain committed to reforms under its programme as it warned of a shortfall in revenue collection
• President William Ruto declined to sign the bill into law and sent it back to the National Assembly after mass protests countrywide

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.

In January, the International Monetary Fund (IMF) predicted that protests may erupt in Kenya if the government introduces new taxes.

Kenyans protested against tax hikes in the Finance Bill 2024. Photo: Anadolu. Source: Getty Images

In its sixth review under the extended fund facility and extended credit facility arrangements, the Washington-DC-based financial institution warned that demonstrations could rock the country if the Finance Bill 2024 was passed.

The IMF noted protests could disrupt businesses and hit the tourism sector.

"Unrest could re-emerge in connection with protests against the higher cost of living, the need to raise more taxes, and the electoral process supported by the political opposition. Any deterioration in the security situation could disrupt trade and tourism," it stated.

Why the IMF pushed for Finance Bill 2024 passage

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

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

"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."

Why are Kenyans against the IMF?

Kenyans online started protests against the IMF days after the financial institution backed the proposed taxes in the Finance Bill 2024.

Frustrated netizens started lamenting on IMF's X page on Monday, June 17, a day before Members of Parliament (MPs) began debating the contentious bill.

On Tuesday, June 18, netizens asked the institution to stop lending to Kenya and condemned the Bretton Woods institution for negotiating multi-billion loans with President William Ruto.

Why William Ruto declined to sign the Finance Bill 2024

• President William Ruto announced the withdrawal of the unpopular Finance Bill 2024 after mass protests.
• Ruto said he had deliberated on the citizenry's concerns and consulted the lawmakers in his faction before making his decision.
• On Wednesday, June 26, he asked Members of Parliament (MPs) to delete all the clauses in the bill.

Proofreading by Asher Omondi, current affairs journalist and copy editor at TUKO.co.ke.