The ongoing mass demonstrations against over-taxation in Kenya in the country over the past week have now escalated dramatically. Demonstrations took place in Nairobi, Mombasa, Kisumi, and other cities. Some of these have now turned violent, causing the government to send in riot police, using tear gas and live ammunition, killing one demonstrator and wounding many more. In Nairobi on June 25, there were reports that the parliament was set on fire, and President William Ruto called the riots a threat to national security.
A more careful look, however, shows clearly that it was the demands from the International Monetary Fund that Kenya increase taxes, which provoked the protests. The IMF spelled that out in a June 11 press release, “IMF Reaches Staff-Level Agreement with Kenya on Seventh Reviews of the Extended Fund Facility and Extended Credit Facility Arrangements and the Second Review Under the Resilience and Sustainability Facility”.
The agreement concerns a periodic review of the Extended Fund Facility and Extended Credit Facility Arrangements, and the Second Review Under the Resilience and Sustainability Facility, which began in April, is required to approve the further release of some $3.6 billion in funds as part of the the “debt sustainability” program. Kenya has a foreign debt of $39.2 billion and a population of 47.5 million.
The IMF staff study spells out the Fund’s terms, demanding: “measures to broaden the domestic tax base, through rationalization of various tax expenditures…. Enhancing tax compliance and increasing the efficiency of expenditures through public expenditure and wage bill reforms, state-owned enterprise restructuring, rationalizing unproductive current spending, and better targeting of subsidies and transfers….” In other words, increase taxes, cut the budget, and privatize public sector enterprises—its usual economic poison offered.
Ruto’s government responded to these demands and announced new taxes at the end of May. The people reacted by immediately taking to the streets, with a general strike on June 25. Demonstrations have been led by young people or “Gen-Z” as the nasty AFP wire puts it.
