IMF lets the cat out of the bag in the latest poverty reduction strategy paper and tells Kenya: “Rein in on the wage bill that could crowd out spending on infrastructure and social protection”

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The IMF, after the Value Added Tax 2013 Act, now requires the Government of Kenya to concentrate on the following;

Macroeconomic policies should cement recent successes by preserving low-inflation, continuing to increase foreign reserves, and aiming at lowering gradually the public debt-to-GDP ratio while raising infrastructure investment

 Improving governance and the business environment should be considered essential for promoting domestic and foreign investment as well as for promoting competitiveness 

Efforts should focus on reining in recent increases in the wage bill that could crowd out spending on infrastructure and social protection 

 Given that the projects and reforms of the MTP-2 go beyond available public resources, the authorities should center on those with higher returns as well as on further attracting private investment. Moreover, borrowing plans should remain anchored within the government’s medium term debt management strategy

 Improving public financial management at both central and county levels should be a priority

 in order to enhance the quality of the proposed public investments in the MTP-2 and ensure that the devolution process yields tangible economic benefits and improved delivery of public services 

 Enhancing use of results in planning and budget processes at both levels of government is recommended to strengthen the links between financial accountability and accountability for
results. Staff also recommends improving timely dissemination of progress reports to inform

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Is International Monetary Fund friend or foe to Kenya’s development?

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