IMF proposals to blame for Kenya’s cash crunch
The current cash crisis in government has been attributed to a decision by Kenyan authorities to implement tough conditions agreed with the International Monetary Fund (IMF) last month. IMF pushed Kenya to adopt an expenditure plan that puts debt repayment top of its spending priorities. In its September report on the country, the IMF disclosed that Kenyan authorities have adopted a pre-emptive approach to process debt repayments. This will see the country start writing cheques to service debts well before they fall due as opposed to the waiting for the lenders to come knocking before the process starts. Kenya is now relying on its reporting systems rather than on invoices from lenders to start processing debt. Second, the payment process will start 30 days before the due date, to allow for internal approvals by the National Treasury and Controller of Budget and timely settlement by the Central Bank of Kenya. See also: The State can’t convince us that coffers have run dry Implementation of this agreement has thrown government spending into disarray at a time when the Treasury is only receiving two thirds of the money it needs to fund all the running projects. The government is also gobbling up billions of shillings in debts to run the country, making it default on repayment obligations. A report of the Parliamentary Budget Office confirmed this and blamed the cash crunch on the move by the National Treasury’s hurry to clear government debts. The cash crunch is hurting government agencies at home and abroad. An ambassador from one of the Middle East countries flew back to Nairobi recently to plead with the government to send his embassy some money. DELAYED TO DISBURSE The government has delayed to disburse money to counties, the Higher Education Loans Board and several state corporations.