Kenya: IMF Agreement, 08/09/00

Kenya: IMF Agreement, 08/09/00

Kenya: IMF Agreement

Date distributed (ymd): 000809

Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: East Africa

Issue Areas: +economy/development+

Summary Contents:

This posting contains excerpts from the press release announcing the new agreement between Kenya and the International Monetary Fund, which went into effect on August 4 with the first installment of $18 million of loans of $198 million over a three-year period. For the full text of related documents, see

A different perspective on Kenya's future appears in another posting sent out today with a speech to the Kenyan Community Abroad by human rights lawyer Njonjo Mue.

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International Monetary Fund

Public Affairs: 202-623-7300 - Fax: 202-623-6278 Media Relations: 202-623-7100 - Fax: 202-623-6772

Press Release No. 00/45

July 28, 2000

IMF Approves Poverty Reduction and Growth Facility (1) Loan for Kenya

The International Monetary Fund's (IMF) Executive Board has approved inprinciple a three-year Poverty Reduction and Growth Facility (PRGF) credit toKenya totaling SDR 150 million (about US$ 198 million) to support the nation'seconomic and structural reform program.

A final decision by the IMF Executive Board is pending discussion by the WorldBank Executive Board of Kenya's interim Poverty Reduction Strategy Paper(PRSP). The World Bank Board is expected to meet on August 1, 2000 to considerKenya's PRSP.

Under the PRGF, the first annual loan to Kenya will be equivalent to SDR 30million (about US$40 million), and the first installment equal to SDR 13.6million (about US$18 million), which will be available when a final decisionby the IMF Executive Board is taken.

In commenting on the Executive Board discussion on Kenya, Stanley Fischer,First Deputy Managing Director and Acting Chairman, made the followingstatement:

"The Kenyan authorities have pursued generally cautious macroeconomic policiessince early 1998 and have made efforts recently to address weaknesses in thegovernance area, thereby paving the way for an arrangement under the PRGF. Intheir Letter of Intent, the authorities commit themselves to consolidating these policies and efforts in order to achieve sustained high growth andpoverty reduction. In this regard, they have prepared an interim PovertyReduction Strategy Paper (PRSP) as a basis for the development of a fullparticipatory PRSP and for Fund concessional assistance.

"The authorities' medium-term reform program aims at maintaining macroeconomicstability and promoting growth with poverty reduction. Removing theconstraints to growth and poverty reduction requires the continued pursuit ofmeasures to improve governance, firm implementation of appropriatemacroeconomic and structural reforms, and significant reallocations ofexpenditure to priority areas, such as health and education. The planned civil service reform, which would free resources for priority social spending, isconsistent with such reallocation.

"Improving governance is an essential element of the poverty reductionstrategy. Early passage of the code of ethics and the anti-corruption andeconomic crimes legislation is especially important in this regard. Theauthorities are also placing emphasis on improving expenditure managementsystems and on rationalizing the project roster to increase the transparencyand efficiency of government operations. Efforts to strengthen the bankingsector are being reinforced, including through the privatization ofstate-owned banks and the improvement of bank supervision.

"The medium-term program envisages key supply-side measures to help place theeconomy on a higher growth path. Actions include the removal of distortions invarious markets, especially in agriculture, rehabilitation of infrastructure,and improvements in the efficiency and governance of public enterprises. The elimination of virtually all suspended import duties, making the trade regimemore predictable and transparent, is welcome. This needs to be followed by theformulation and implementation of a program to rationalize and reduceremaining import duties and exemptions.

"The authorities face the important challenge of addressing the effects of theunfolding drought on food and energy supplies. The Fund stands ready to assistKenya in these difficult circumstances, in the context of the broader effortsled by the international community," Mr. Fischer said.


Program Summary

Kenya's socioeconomic conditions deteriorated significantly in the 1990sbecause of stop-go macroeconomic policies, slow structural reform, andpervasive governance problems that resulted in bouts of financial instability,a rapid buildup of short-term debt, and high real interest rates. Since early1998, the government has been addressing some of the causes of financialinstability and low growth. The fiscal deficit (on a commitment basis before grants) has been gradually reduced and is estimated to have been 0.6 percentof GDP in 1999/2000. Monetary policy has been generally conservative. Thegovernment has been preparing the ground for key structural reforms inprivatization and public service, and since mid-1999 important steps have beentaken to address governance problems. These measures have helped increase theconfidence of the international community, however investor confidence hasbeen slow to turn around, and real GDP growth declined to 1.4 percent in 1999from 1.8 in 1998.

Reductions in the fiscal deficit (after an initial increase) and the domesticdebt burden will be aimed at sustainably reducing real interest rates andbuilding confidence in the government's fiscal prudence. These efforts will beaccompanied by measures aimed at reducing the tax burden (particularly on thepoor), improving tax administration, as well as at strengthening expendituremanagement. Monetary policy will be geared to keeping inflation low, and theexchange rate will remain market determined.

The structural reform program focuses on streamlining the public service,reducing the role of government in commercial activities, and prioritizingpublic expenditure. The privatization program will focus on key enterprisesthat provide essential infrastructure services, including the Kenya TELKOM andthe Kenyan Commercial Bank. Suspended duties on imports have been eliminated and the authorities are committed to implementing over the program period atariff reform aimed at reducing domestic protection.

Poverty Reduction Strategy

The program's strategy, which is closely linked to the recently initiatedmedium-term expenditure framework (MTEF), was worked out in consultation withstakeholders from civil society and is expected to be fully developed by May2001, in the context of the full Poverty Reduction and Strategy Paper (PRSP). Expenditure reallocations toward priority sectors need to be defined, in close consultation with stakeholders (especially the poor), in the full PRSP andsubsequently incorporated in the 2001/02 MTEF. The planned public servicereform and the envisaged reductions in the debt service burden are expected toprovide room for additional resources to be allocated to poverty reductionprograms over the medium term. In the meantime, the fiscal program for 2000/01 focuses on a few key poverty reduction measures and some intraministerialreallocations aimed at improving the targeting of existing expenditure.

Kenya joined the IMF on February 3, 1964 . Its quota (2) is the equivalent of SDR271.40 million (about US$359 million). Its outstanding use of IMF financingcurrently totals the equivalent of SDR 78 million (about US $103 million).

(1) On November 22, 1999, the IMF's concessional facility for low-incomecountries, the Enhanced Structural Adjustment Facility (ESAF), was renamed thePoverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based oncountry-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a povertyreduction strategy paper (PRSP). This is intended to ensure that eachPRGF-supported program is consistent with a comprehensive framework formacroeconomic, structural, and social policies to foster growth and reducepoverty. At this time for Kenya, an interim PRSP sets out a preliminaryframework in a statement by the government and the participatory process is underway. It is understood that all policy undertakings in the government'sstatement beyond the first year are subject to reexamination and modificationin line with the strategy that is to be elaborated in the PRSP. Once completedand broadly endorsed by the Executive Boards of the IMF and World Bank, thePRSP will provide the policy framework for future reviews under this PRGF arrangement. PRGF loans carry an interest rate of 0.5% a year, and are repayable over 10years with a 5 .5-year grace period on principal payments.

(2) A member's quota in the IMF determines, in particular, the amount of itssubscription, its voting weight, its access to IMF financing, and its share inthe allocation of SDRs.

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Subject: Kenya: Uhuru Generation


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Kenya: Uhuru Generation

Date distributed (ymd): 000809

Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: East Africa

Issue Areas: +economy/development+ +political/rights+ Summary Contents: This posting contains a speech by human rights lawyer Njonjo Mue to the annual conference of the Kenyan Community Abroad (KCA). Additional documents from the conference and information about the KCA can be found on the KCA web site ( The KCA also has a very active discussion group (kca-l) at

Another posting today includes a press release on the new agreement signed between the International Monetary Fund and the government of Kenya which went into effect this month.

+++++++++++++++++end profile++++++++++++++++++++++++++++++

Uhuru Generation: Taking a Stand on High Ground!

An address by Njonjo Mue to the Kenya Community Abroad (KCA). Conference on Kenya in the 21st Century

St Paul, MN, USA

30 June - 3 July 2000

The voice of our generation has been silent for far too long. Tonight, I want to speak to you about our role in Kenya's reconstruction and transformation as well as our vision for the country we wish to build and pass on to those who come behind us.

Not very long ago, Kenya was proudly referred to as the 'Shining Star of the East'. A rare African showcase. It was a land where black and white lived together in peace; the economy was growing; the dignity of all was taken for granted, and we all knew a bit of what it was to be human -- to have food for our bodies, education for our minds, houses to live in and roads to travel on. We shared what we had equitably, and where it was not enough to go round, we ensured that there was equal opportunity to compete for access to the riches of the land. We celebrated our strong but we also took care of our weak. For a while, the birthplace of humankind was also becoming the cradle of human hope.

But that was then.

To go to Kenya today is to descend into the valley of the shadow of death.

Our country is in darkness in more ways than one. Death strikes with unnerving frequency and ruthless efficiency - on our roads, in our hospitals, in ethnic clashes, through mob violence, even through bombs targeted at other people.

The walls we built to keep out the enemies of poverty, hunger and disease have all been torn down. God's children now huddle pitifully together, exposed to the elements of hopelessness, and vulnerable to the merciless chill of despair.

Today life in Kenya has become a meaningless search for meaning. Death is the only certainty we know - death of the body and spirit long before the death of the body. Kenya closely resembles Ezekiel's valley of dry bones. For we are surrounded by dry bones scattered over a patched and thirsty land. They include massive corruption and looting of the resources of the land by their custodians, tribalism, collapsed systems, urban decay, rural underdevelopment, and so on.

We are all well aware of what ails our land, so I shall not dwell on it. Instead, allow me to focus on the two realities that we must confront.

Defining the Uhuru Generation:

I wish to remind you that throughout this discussion, I am an emissary of the Uhuru Generation. So I better take a moment and define who I am talking about.

The Uhuru Generation is the generation of women and men born after the midnight hour of 12 December 1963. They are the true daughters and sons of Kenya having been born in Kenya after the country joined the family of sovereign nations in contrast to those naturalized citizens like Daniel Arap Moi who had to give up the citizenship of Empire when Kenya was born in 1963.

Ours is the generation in whose name the struggle for independence was waged. But we now find ourselves impoverished and disinherited, aliens and sojourners in the land of our birth. We are the inheritors of an uneasy peace. But despite forming the overwhelming majority of Kenya's population today, we have largely been excluded from taking our full part in shaping the fortunes of our country.

Not only are we the majority of Kenya's masses, we also shoulder a disproportionate burden of Kenya's losses. Young people today bear the brunt of poverty, unemployment, HIV/AIDS, failed social services and collapsed infrastructure. Not only has the political class stolen from us the tangible little luxuries of this life, they have deigned to take from us that which only the Creator can give and take by robbing us of the intangible qualities that define us as humans --like hope, godly ambition, genuine peace of heart and mind, and the ability to dream of a better tomorrow. We squint as we gaze at the horizon trying to make out the light of our new dawn but all we can see is darkness unending.

But it has not always been this dark. For across the sky of our long night of lost opportunities, there have been a few scattered stars. They have twinkled briefly to illuminate our collective path before flickering out again. We would not lament their demise had they not etched themselves on the edges of our consciousness. The generation for which I speak is not ungrateful for the contributions of those gone before us. We are beholden to them:

In a word, we are not ungrateful to all the women, men and children who have given their lives in the search for peace and the struggle for human dignity in our homeland of Kenya. We celebrate their courage and their sacrifice.

But great though their accomplishments are, we must hasten to remind ourselves that a growing nation cannot afford to rest on its laurels, for its children will not find solace in its glorious past. We must confront present realities in order to march confidently into our common future.

We cannot continue to play second fiddle in the country that we own, while people who have clearly demonstrated that they have no stake in our future run it to the ground. Young people cannot sit by and let others define them or their mission on their own terms.

A country divided - Kenya's apartheid:

A country divided cannot stand. South Africa is a very good case study. I have heard a lot of people mistakenly saying that South Africa gained her independence in 1994. This is not true. South Africa gained independence in 1910. That was the year that the Union of South Africa was formed after the Anglo-Boer war resulted in the departure of the British colonialist. But after the exit of the colonial rulers, a tiny minority of South Africa's population took the reigns of power and systematically oppressed the majority. This culminated in the introduction of formal apartheid rule in 1948 when the National Party government came to power. And as we all know majority rule was finally achieved in 1994 after a long and bloody struggle.

Kenya still yearns for her 1994.

British colonists left in 1963, but we have not as yet achieved majority rule. Like South Africa, a minority group took the reigns of power after independence. The same group continues to oppress the majority to this day, with a few comings and goings. The only difference is that unlike South Africa, the protagonists in Kenya are not defined by race. They are not even defined by tribe or class. They are defined by age and gender. A tiny minority of old men led by Daniel Moi continues to ride roughshod over the majority of the people - mainly women and the Uhuru Generation.

But we should not merely point to the government, for it is by no means the only culprit. I am referring to the establishment as a whole. For just like apartheid in South Africa extended its tentacles to every facet of society, so too Kenya's minority of old males with one foot in the grave extends its rule everywhere, including the political Opposition, the institutions of learning, business, the church and the media. And to merely ask Moi to leave office is equivalent to asking F. W. De Klerk to quit government while leaving the whole apartheid machine intact. Like Apartheid in South Africa, Kenya's Geriatric Oligarchy cannot be reformed. It must be dismantled.

That is why the message that must go out of St. Paul tonight, and reverberate in the ears of Mr. Moi and Mr. Kibaki; Mr. Nyachae and Mr. Saitoti; Mr. Muite and Mr. Raila, is as simple as it is profound. GENTLEMEN, END THIS APARTHEID NOW!

But for those who might find the apartheid paradigm uncomfortable, let me approach the same conclusion from another direction. When a monarch dies leaving an heir who is too young to rule, a Regent is appointed to oversee the affairs of state until the heir becomes of age. Well, I submit to you that the time has come for the regents appointed on our behalf in 1963 to get out of the way, for the rightful heirs to Kenya's throne have finally come of age.

Throwing old men into the sea?

But, one might ask, what about our tradition and the place it accords to elders? Are we throwing all that away? The answer is no. We are not advocating that we throw all old men into the sea (though their performance lately has caused the thought to cross our minds). We will continue to value their wisdom and their experience.

We are not departing from tradition, but enforcing it.

For Africans never did send their old and their frail into the battlefield. We listened keenly to their whispers of wisdom. But it is the young that must go to the front line and face the enemy.

What enemies do we face today?

We face the challenges of the information revolution - what sense does it make to send someone who has never used a computer to the frontline? We face the challenge of globalization - What sense does it make to promote somebody to the rank of General by virtue only of the fact that he studied economics at the LSE in the early sixties? We face extinction through HIV and AIDS - what sense does it make to let a conservative old man who cannot mention the word 'sex' without biting his tongue command our troops? We face humiliation as a people and indignity as a race - What sense does it make to prop up Lieutenants by virtue only of the fact that their colour is acceptable to those to whom we extend our begging bowls?

Not only does it not make sense to recruit from among the ranks of the old and infirm, we should also be careful to recruit soldiers with demonstrated loyalty to our cause. For we have been jilted for far too long and cheated far too often. We have had our hearts broken when we found suitors who had vowed to remain forever faithful to our cause in bed with those ravishing us.

But even though we are a hurting people today, I must state emphatically that we are not a desperate people; what's more, we much wiser for our experiences. Consequently, we shall no longer take our latter day saints at their word. You cannot sup with the devil one day and then anoint yourself our savior the next.

And so even as we nurse our wounds, we need to marshal supreme confidence and demonstrate to the world that Kenyans and Africans are not the children of a lesser god. We cannot do so without the wisdom and experience of the elders, but they must not purport to fight the battles of our time for us.

That, we must do for ourselves.

Without a vision

I suppose by now you are all thinking that I am being a bit tough on the old folk and blaming them for everything. Well, not quite. The last dry bone in Kenya's wasteland of lost opportunities is one for which we all share a responsibility. It is the bone of a lack of a vision.

To what does our government aspire beyond perpetuating its own stay in power? What does the opposition work for beyond trying to capture that power? What are we as a people working for beyond mere survival?

In short what is the vision for our country?

In the history of our nationhood, we have often substituted platitudes for vision. In the 1970's and 80's the government promised that there would be electricity for all by the year 2000; water for all by the year 2000; education for all by the year 2000; health for all by the year 2000.

Well, 2000 is halfway gone and on all scores we are worse off than we were when these empty promises were made. Like all the empty promises of yesteryear, the latest round, including that of industrialization by 2020, are just hollow platitudes.

One is tempted to think that at the time of these extravagant promises, the Kenyan government seems to have hoped that the world would end by the year 2000 - in which case all their promises would be fulfilled in heaven. Now that the end is not nigh, one wonders what next, mass suicide? Well, not quite. But perhaps the equivalent seeing as the government is doing all it can to encourage Kenyans to immigrate abroad where at least there is electricity, water and education for all in the year 2000.

But it behooves our generation to define a new vision for our country and to draw a roadmap to a new dispensation. We cannot wait for the government to do this for us. We must somehow find the courage to forge a new consensus for the country that we wish to build and bequeath to those who come behind us. We might be able to draw some inspiration from our past achievements, few though they are, but we cannot hope to find the answer for our tomorrows in our yesterdays.

But why is vision important?

There are two main reasons.

First, 'without a vision the people perish'. The word for 'perish' in the original Hebrew does not actually mean physical death. It means that people go naked and are impoverished. But one does not need to understand Hebrew to see that this is exactly the state we are in today. We can blame our woes on any number of people - Parliament blames Biwott, for the power rationing; Biwott blames Kibaki and Nyachae; Nyachae says Moi should take responsibility; Moi says he was not a rainmaker!

Every time a catastrophe strikes us. We can round up all the usual suspects - Moi, Kenyatta, constitutional reform, colonial rule, world economic order, the weather, my neighbour's tribe, your sister's gender, and so on.

But I came all the way from Johannesburg to St. Paul today, to let you know that we are doomed to go round in circles - to repeat the same mistakes, to play the blame game, to wallow in the valley of despair - until we apprehend the real culprit: Our own loss of a dream; our own lack of vision.

The second reason why vision is vital is this:

Without a future, human beings are programmed to go back to their past.

Every time the children of Israel lost sight of the Promised Land they demanded of Moses that he take them back to Egypt. A man who sees no future in his marriage will return to his multiple partners. And ask any police investigator where they go to look for a convict who has escaped from jail - they go to all the places where he used to hang out.

Tragically, we see many examples of that in Kenya today. Children are doing homework by candlelight tonight, families eat in darkness in scenes reminiscent of the 1960s. We have also taken to appointing white Kenyans to important positions, not necessarily because they are competent, but in a cynical attempt to win favour from our former colonizers who instinctively trust their own kind more than they trust us. Even more tragically, I have heard intelligent people ask, "If only the British would come back and colonize us!"

Without a future, we have gone back to our past. Without a vision, the people are perishing.

But we must never give up hope. It is not too late to define a new vision for our country. This is the vision of the Uhuru Generation:

We shall build a strong, united and prosperous African country comprising a diverse multicultural society, with a vibrant economy providing equal opportunity for individual and communal growth; and where freedom, human dignity and respect for the rights of all will be the basis of social behaviour by the citizen and the State alike.

But what will separate our vision from the 'by the year 2000' platitudes I spoke about earlier?

By constantly remembering that vision without action is fiction; by developing programmes that are carefully design to make our vision a reality, and by moving beyond merely talking about our problems to actually individually owning them and mobilizing our own physical and intellectual resources to reclaim out land of promise.

And of vital importance, we must remember that we will never attain our vision in the sense that we can sit down and rest. We must forever keep it ahead of us so that it can define our purpose, set our boundaries and parameters and test our character, individually and collectively. And when the Uhuru Generation itself becomes older, and if we have been faithful in staying on the path, we shall not fear to hand over to the next generation to continue to build upon the promise.


I wish to end where I began, with the Prophet Ezekiel at the valley of the dry bones:

"Young woman, young man, can these bones live again?"

The answer lies in the eye of the Beholder For if we focus only On the legacy bequeathed us

By those gone before us

A legacy of wasted years and lost days

Of greed and corruption, vice and violence Of shattered lives and broken dreams Then we can only but see dry bones

At the bottom of the desolate valley

Of our painful yesterdays.

But if we lift up our eyes unto the hills And focus our gaze On the distant horizons

Of our new tomorrows

If we defy the odds and rebuild together

If we make God our closest ally

And vision our guiding principle

Then we shall see our homeland of Kenya

Once again becoming A heritage of splendor.

An address by Njonjo Mue to the Kenya Community Abroad (KCA)


Message-Id: <> From: "APIC" <> Date: Wed, 9 Aug 2000 22:24:28 -0500

Subject: Kenya: IMF Agreement

Editor: Ali B. Ali-Dinar

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