A new report, ‘The Impact of the IMF Fiscal Consolidation Programme on the Kenyan Economy, Livelihood, and Overall Accountability Framework,’ was launched shedding light on the IMF’s policy
By Cynthia Masibo,
A new report, “The Impact of the IMF Fiscal Consolidation Programme on the Kenyan Economy, Livelihood, and Overall Accountability Framework,” was launched yesterday, shedding light on the profound effects of the International Monetary Fund’s (IMF) policies on the country’s economic landscape. This comprehensive study, conducted by a coalition of local and international economists, delves into the repercussions of austerity measures mandated by the IMF and their implications for Kenya’s socio-economic fabric.
Economic Strain and Growth Slowdown
The report reveals that the IMF’s fiscal consolidation programme, initiated to stabilize Kenya’s debt and foster economic growth, has had mixed outcomes. While the measures have succeeded in reducing the fiscal deficit and stabilizing public debt, they have also precipitated a slowdown in economic growth. The GDP growth rate, which stood at 6.3% in 2018, has decelerated to an average of 3.5% over the past two years. This slowdown is attributed to reduced government spending on critical sectors such as infrastructure, education, and healthcare, which are vital for long-term sustainable growth.
Dr. Jane Mwangi, the lead author of the report, noted, “While fiscal consolidation is necessary for debt sustainability, the pace and scale of implementation have had unintended consequences on economic growth. The reduction in public investment has dampened economic activity and slowed down job creation.”
Impact on Livelihoods
One of the most concerning findings of the report is the adverse impact on livelihoods. The austerity measures have led to significant cutbacks in social spending, affecting the most vulnerable segments of the population. Unemployment rates have surged, particularly among the youth, exacerbating social inequalities.
The report highlights that the poverty rate has increased by 2% since the implementation of the IMF programme, reversing the gains made in poverty reduction over the past decade. Additionally, access to essential services such as healthcare and education has been compromised, with many households unable to afford basic necessities.
Rosemary Achieng, a single mother of three from Kibera, shared her struggles, saying, “The cost of living has skyrocketed. Food prices have doubled, and it’s becoming impossible to provide for my children. The cuts in government subsidies and social programs have made our lives much harder.”
Accountability and Governance
The report also scrutinizes the accountability framework within which the IMF programme operates. It underscores the need for greater transparency and inclusiveness in the decision-making process. The study calls for enhanced oversight mechanisms to ensure that fiscal policies do not disproportionately harm the poor and marginalized communities.
Dr. John Kamau, an economist and co-author of the report, emphasized, “There is a critical need for robust accountability frameworks to monitor the implementation of IMF programmes. Stakeholder engagement, including civil society and local communities, is essential to ensure that fiscal policies are equitable and do not undermine social cohesion.”
Recommendations
The report offers several key recommendations to mitigate the negative impacts of the IMF programme. These include a more gradual approach to fiscal consolidation, prioritizing social spending to protect vulnerable populations, and strengthening accountability mechanisms to ensure that fiscal policies are inclusive and transparent.
Furthermore, the report advocates for economic diversification to reduce dependency on a few sectors and enhance resilience against external shocks. It also calls for increased investment in human capital to drive long-term economic growth and development.
Conclusion
The launch of the report has sparked a vital conversation about the balance between fiscal stability and social equity. As Kenya navigates the challenges posed by the IMF programme, it is crucial to adopt policies that foster inclusive growth and protect the livelihoods of its citizens. The findings and recommendations of this report provide a roadmap for policymakers to achieve sustainable and equitable economic development.
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