According to a report appearing on Business Daily, the International Monetary Fund (IMF) has told Kenyan authorities to stop wasteful spending, noting that the State had already breached fiscal deficit targets.Â In a mission to Kenya between May 20 and June 2, the IMF said that Kenya should also increase revenue in order to meet priority budget items.
â€œThe mission urged the authorities to boost efforts to mobilise domestic revenue and restrain current spending, so as to preserve room for critical priorities, notably closing infrastructure gaps, supporting an orderly devolution process, and strengthening the social safety net,â€ said the IMF in a statement sent late on Thursday.
The National Treasury has traditionally had a five per cent fiscal deficit as a percentage of the Gross Domestic Product, but the gap is well over seven per cent for the financial year ending this month and is projected â€” under the Budget Estimates 2015-16 â€” at 8.7 per cent in the next year.
â€œThe fiscal deficit is projected to rise above the original targets in both financial year 2014/15 and financial year 2015/16,â€ said the IMF.
The IMF also noted that the construction of the standard gauge railway had progressed at a faster pace than had initially been expected.Â The IMF was in Nairobi to conduct the first review of the economy under the most recent financial arrangement intended as a precautionary facility whereby Kenya would only draw cash when there is a crisis. The facility amounts to Sh67 billion or $688 million.
Meanwhile, a report by the World Bank has dismissed the economic vitality of the standard gauge railway which is President Uhuru’s pet project. The World Bank joins other notable critics, including revered economist David Ndii, to pour cold water on the SGR.
“Investment in standard gauge appear only to be justified if the new infrastructure could attract additional freight in order of 22-50 million tons per year. Based on traffic forecasts undertaken for EAC Railway masterplan…and the central line in Tanzania, these volumes appear unattainable in the medium and long term”. The report concludes that there is ‘no economic or financial case’ for the SGR.