The chief minister said the IMF will review Kenya’s economic strategy at the end of August

Kenya’s chief minister informed a parliamentary panel that the government has submitted an economic repair plan to the International Monetary Fund, and that it anticipates the fund’s board reviewing and approving it by the end of August.

After widespread youth-led protests over tax hikes originally proposed by President William Ruto’s cabinet resulted in at least 50 fatalities, Kenya had to quickly enact additional spending cuts.

Despite the setback of the tax hike, Kenya’s chief minister, Musalia Mudavadi, stated that the Treasury “has had a very robust engagement with the International Monetary Fund”.

In comments seen by Reuters on Tuesday, Mudavadi told the parliamentary budget committee, “It is our desire and hope that Kenya’s proposition will receive favorable consideration so that we can move beyond the challenges that we are facing.”

IMF did not respond right away. The IMF has a $3.6 billion program for the East African country, and in early June, the Fund’s staff level agreement was achieved over the seventh review of Kenya’s program.

However, when Ruto abandoned the tax increases that were a crucial component of its strategy to fulfill IMF targets, its board had not yet approved the review, and investors expressed concern that the political unrest would make obtaining IMF funding more difficult.

Kenya had requested IMF waivers even throughout the review, having missed two deadlines for balancing the budget and tax collection.

The budget deficit is expected to increase to 4.2% of GDP under the updated spending plan for the 2024–2025 fiscal year, up from 3.3% prior to the withdrawal of the finance law, according to Mudavadi.

Ayodeji Dawodu, head of Africa research and strategy at boutique investment banking firm BancTrust & Co., stated in a note that “the revision to the deficit barely a week after the initial plan underlines the herculean task faced by the authorities to achieve their fiscal consolidation goals.”