Kenyans, brace
yourselves. Because God has spoken, ready yourselves for what is probably the
worst economic crisis in the history of our country:
Fuel subsidies are going to be fully eliminated by the end of September 2022. What this means is that our government will no longer protect its people from the vagaries of swings in the international price of oil. What then, is the role of government if not to protect its people from shocks, of which oil price dynamics are some of the most consequential?
Electricity tariffs will have to increase (via subsidy removal) and the IMF wants the government to publish a plan for doing this by December 2022. This is going to cause pain among our people.
Value Added Tax (VAT): The IMF wants us to "broaden our VAT base" which is just a euphemism for limiting the number of goods that are VAT exempt. The VAT is one of the most regressive taxes in the world because it impacts the poor much more than the well-off. Because of this, governments often exempts many products from VAT to protect the poor. The IMF now wants us to do the reverse and do so in quite a drastic way.
The fertilizer subsidy to go before 2025. This means more and more families will be food insecure.
Reduction in corporate taxes. Who owns those corporate businesses? Your guess is as good as mine.
The conditions
are incredible, unbelievable, heartless and basically make for very depressing
reading. Meanwhile, China has also this month waived loan interest for
African countries but have excluded Kenya from that list.
Before I sign
off, I would like to address the civil society, who went along for the IMF ride,
appearing in numerous photo ops with IMF staff, and largely gave credence to
the opaque process that gave birth to this anti-poor deal. This, my friends, is
on you. You went to sleep at the wheel when your role was—and historically has
been—to protect the interests of the people, especially the least among us.
Posterity will be the judge, and I wager that the judgement will be harsh.
Comments