Thursday, September 26, 2024 - Kenya’s financial agreement with the International Monetary Fund (IMF) is set to suffer a huge setback following the decision by the High Court declaring the Privatisation Act of 2023 unlawful.
Under the agreement with the IMF, Kenya had to make certain financial decisions before securing a USD 3.6 billion (Ksh 464.4 billion) loan.
Kenya
was committed to making some financial decisions, including privatizing loss-making state-owned enterprises before the IMF would extend the loan facility.
This
was based on the information that in the financial year 2022/23, 242 entities
incurred losses amounting to 0.7% of Gross Domestic Product (GDP).
To
get the concessional facility from the IMF, the government committed to
ensuring key financial decisions, including the privatization of
state-owned firms.
The
government also committed to making recommendations and actions toward the
shutting of some loss-making entities, including the transfer of some of those
entities that were making profits back to the government.
These
decisions were to be made within a confined time frame and to be precise,
by October 2024.
The
decision by the High Court to suspend the Privatisation Act 2023 is therefore
set to affect Kenya’s commitment to financial reforms to the IMF for loan
consideration.
Attention
will now shift to the IMF on what response they will offer the government
after one of their pre-conditions suffered a setback.
Another
glaring loss that the government is staring at is the likely event that the
Finance Act of 2022/2023 is declared unconstitutional by the Supreme Court
which is set to deliver a ruling on the same.
The Kenyan DAILY POST
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