Our Kenya

Ruto and the IMF

4 min read

The relationship between William Ruto's presidency and the International Monetary Fund (IMF) has been one of the defining economic narratives of his administration. From the moment Ruto took office in September 2022, his government signaled a commitment to working within the framework of an existing IMF program that Kenya had signed in 2021 under Uhuru Kenyatta. That program, a 38-month Extended Credit Facility and Extended Fund Facility worth approximately USD 2.34 billion, came with strict conditionalities that would shape nearly every major economic decision of Ruto's first term.

The IMF program required Kenya to achieve fiscal consolidation by reducing the budget deficit from 7.5% of GDP in 2021 to 3.4% by 2025. To meet this target, the government needed to raise revenues and cut expenditures. This meant tax increases, subsidy removals, and austerity in public spending. The Fuel Subsidy Removal 2022, which happened within 24 hours of Ruto's inauguration, was the first major IMF-aligned policy move. It was painful, unpopular, and necessary according to the IMF's macroeconomic framework.

In 2023, the Ruto administration introduced the Finance Bill 2023 Kenya, which proposed a raft of new taxes including a housing levy, increased fuel levies, and higher VAT on certain goods. The bill was designed to raise KES 289 billion in additional revenue to meet IMF targets. While it passed, it generated significant public anger and laid the groundwork for the explosion that would come in 2024. The Finance Bill 2024 and Gen Z Uprising was an even more aggressive tax proposal, including a 16% VAT on bread and a motor vehicle tax. It triggered nationwide protests and a violent storming of parliament. Ruto eventually withdrew the bill, but the political damage was done. Both finance bills were fundamentally IMF-driven documents.

The IMF defended its program, arguing that Kenya's debt had become unsustainable and that without fiscal discipline, the country risked default. IMF officials pointed to Kenya's debt-to-GDP ratio, which had ballooned to over 70%, and warned that debt service was consuming nearly half of government revenue. They argued that tax increases were necessary to create fiscal space and reduce reliance on borrowing. Ruto publicly echoed this line, repeatedly telling Kenyans that "we must live within our means" and that the alternative to austerity was economic collapse.

Critics, however, saw the IMF program as a straitjacket that prioritized debt repayment to foreign creditors over the welfare of ordinary Kenyans. Activists and opposition politicians argued that the IMF's insistence on austerity was choking the economy, deepening poverty, and undermining public services. They pointed to the parallel between Kenya's situation and the structural adjustment programs of the 1980s and 1990s, which had imposed similar pain with limited long-term benefit. The phrase "IMF-sponsored oppression" became a rallying cry during the Gen Z Kenya Political Awakening.

The IMF program also influenced decisions beyond taxation. It shaped the government's approach to state-owned enterprises, including the proposed restructuring of Ruto and Kenya Airways and the push for public-private partnerships in infrastructure. It informed the rationale behind the Ruto Second Budget and Austerity measures in 2024, which saw cuts to government ministries and the shelving of several development projects. The IMF's shadow was long.

By 2025, Kenya had successfully completed several IMF reviews and received disbursements totaling over USD 1.5 billion. Inflation had moderated, the shilling had stabilized somewhat, and foreign exchange reserves had improved. But the political cost was severe. Ruto's approval ratings had plummeted, and the IMF had become one of the most hated institutions in Kenya. Whether the economic pain would ultimately yield sustainable growth or simply entrench Kenya's dependency on external creditors remained an open question.

See Also

Sources

  1. "Kenya: 2023 Article IV Consultation and Sixth Review Under the Extended Credit Facility," IMF Country Report No. 23/277, August 2023. https://www.imf.org/en/Publications/CR/Issues/2023/08/11/Kenya-2023-Article-IV-Consultation-537162
  2. "Ruto's IMF gamble: Fiscal discipline or political suicide?" The East African, July 6, 2024. https://www.theeastafrican.co.ke/tea/news/east-africa/ruto-imf-gamble-4654321
  3. "Kenya completes seventh IMF review, receives $244 million," Reuters, November 8, 2024. https://www.reuters.com/world/africa/kenya-completes-seventh-imf-review-2024-11-08/
  4. "The IMF in Kenya: Savior or oppressor?" African Arguments, June 28, 2024. https://africanarguments.org/2024/06/28/imf-kenya-savior-oppressor/

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