Cotu blames IMF, World Bank for shilling fall
The Central Organization of Trade Unions (Cotu) has raised concerns over the government’s dalliance with the International Monetary Fund (IMF), blaming the multilateral lender as being behind the fall of the Kenyan Shilling and asking the government to end further programmes.
Cotu blames the IMF for introducing tough conditions to the government to extend more funding to Kenya, which it says have not only raised the cost of living for Kenyans but also contributed to the depreciation of the Kenyan Shilling.
In a press conference yesterday, the labour movement following a meeting of its affiliate unions warned that the country was returning to economic difficulties witnessed in the 80s and ’90s, during the infamous Structural Adjustment Programmes (SAPs).
“We in labour movement don’t want to have any programme with the World Bank and IMF and we are alerting the government that if it listens 100 percent to IMF then we will go down. What they are doing does not reflect the real economic activities on the ground,” said Cotu Secretary-General, Francis Atwoli.
Mr Atwoli blamed the IMF for being behind the devaluation of the shilling and called on economists to “speak up that what is happening on the devaluation of our shilling on the recommendation of the IMF and World Bank is not real.”
Cotu hit out at the IMF, blaming the lender for the incessant pressure resulting in the weakening of the value of Kenyan shilling vis-à-vis the dollar.
This has seriously drained the purchasing power of workers as well as workers’ savings, COTU argued. The union noted that the value of the Kenyan Shilling had fallen from exchanging at 120.42 units against the US Dollar in September 2022. The exchange rate on the two currencies is currently above 160 units, in favour of the Dollar.
The labour movement blames Treasury Cabinet Secretary Njuguna Ndung’u and Central Bank of Kenya Governor Kamau Thugge for being too soft to IMF, noting that “the previous governor of Central Bank had put glues in his ears. He was not listening to them because what they are doing does not reflect the real economic activities on the ground.”
With the shilling on a downward spiral, the country’s international trade balance continues to be negative, further weakening the shilling as more foreign currency is needed for imports, making it difficult for importers to pay for their products due to the high exchange rates.
The union also cautioned the government against continued heavy borrowing, including from the multilateral lenders, whom it sees extend funds with tough conditionalities.
Kenya’s public debt hit Sh8.6 trillion by September last year and the government plans to borrow Sh861 billion during the year ending June, based on projections from Treasury.
“Considering this increase, and given that the government is continually borrowing to pull itself out of the cash crunch, things are not looking better,” said Mr Atwoli.
“How do we borrow to save an economy being ruined by borrowing? How do we determine how much to borrow domestically or externally?” he posed.
The labour movement raises concerns just a week after the IMF released about Sh150 billion following the conclusion of the sixth review of the ECF/EFF programme, bringing to $2.6 billion (about Sh416 billion) the total amount Kenya has so far received from the multilateral lender since launching of the programme in April 2021.
The programme was originally planned to end this year but was extended by 10 months in July last year, to now end in April 2025.
The multilateral lender has been behind most of the changes the government has implemented on public finances, mainly newly introduced taxes and additional taxes since the start of the programme.
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