politics | So dealing with the IMF most often leads to fucking over a country: Kenya

Is the IMF obstructing Kenya’s devolution process? by Charles Abugre

'If a government based on devolution and the dispersal of power is to be given a chance, the IMF’s role in political horse-trading in Kenya should be curtailed,' argues Charles Abugre.

There is a tense stand-off in Kenya between the Ministry of Finance and the Ministry of Local Government, which is holding hostage critical laws that need to be passed to implement the generally acclaimed 2010 Constitution. These ministries differ sharply on how to regulate the management of public resources. They have submitted separate draft bills to the Constitutional Implementation Commission (CIC) to be forwarded to parliament. The one from the Ministry of Finance (The Treasury) is an Integrated Bill covering the two levels of government – the national and the county. The Ministry of Local Government has put forward two related Bills, one specific to the financial management of the county government and the other – an Intergovernmental Fiscal Relations Bill – which aims to create mechanisms for ensuring coherence between the two levels of government in relation to the management of public finance. This ministry opposes the single Integrated PFM Bill approach and argues strongly for a separate Bill to strengthen the devolution process and fears that the Integrated PFM approach is a stealthy way of re-centralising power. The Constitution of Kenya creates two levels of government which are independent of each other but who should ‘collaborate and cooperate’ for the public good – very much like the American political system.

The disagreements between these two ministries, both represented by Deputy Prime Ministers, is so sharp that the CIC felt compelled to refer the matter to the two principals of the coalition government, President Mwai Kibaki and Prime Minister Raila Odinga. Word has it that although the principals were unable to reach an agreement they were perhaps leaning towards the Integrated Bill approach and therefore have ordered the two ministers to consolidate their drafts into a single Bill. This apparent decision has severely irked Kenyan civil society and the taskforce put together to detail out the devolution process and whose advice informed the Bills submitted by the Ministry of Local Government. Their anger is based on the justifiable fear that the Treasury is actively seeking to roll back powers taken from them by the constitution’s strong focus on devolution, participation and service orientation.

If it is true that the two principals are converging around a single Integrated PFM Bill, this position invariably endorses the position that the International Monetary Fund (IMF) has invested heavily in promoting, ever since the referendum which endorsed the constitution. Since at least September 2010, the IMF has pushed two issues related to Public Finance Management – the creation of Integrated Public Finance Management Bill and the creation of a Single Treasury Account. Both of these positions eventually found their way into the IMF Loan Agreement with the Government of Kenya as conditionalities (Structural Benchmarks) that attract penalties if violated without a formal waiver from the IMF Board. Treasury upheld these issues because they favour Treasury. Together with other recommendations, the IMF has intervened in a manner that could be severely detrimental to the devolution process. The IMF’s wading into the constitution implementation process in the way in which they did is highly dangerous as it borders on crude political interference and is a grey area in the IMF’s mandate. I would argue that the IMF needs not be so blatantly anti-devolution in order to ensure that devolution does not create run-away expenditure and indebtedness that could derail macroeconomic stability. Kenyans need to know that behind the Treasury position is the heavy arm of the IMF. The IMF’s position on this should be out in the open and Kenyan citizens deserve to debate its merits. How the IMF intervened