IMF Pushes Ruto to Reduce Tax Exemptions and Widen Tax Base

The International Monetary Fund (IMF) has urged President William Ruto’s administration to broaden Kenya’s tax base instead of increasing existing tax rates as the country prepares for fresh discussions with the global lender in December.

The recommendation comes amid growing concerns over Kenya’s public debt, rising government expenditure and the increasing cost of living, which has placed considerable pressure on households and businesses.

Speaking during a briefing in Washington, IMF Communications Director Julie Kozack said Kenya was facing significant fiscal and debt-related challenges that required a balanced approach to address.

She explained that the government should concentrate on ensuring everyone who is legally required to pay taxes fulfils their obligations rather than continuously increasing tax rates.

The IMF also called for the reduction of tax exemptions, stronger tax compliance measures and improved management of public expenditure.

It further recommended greater transparency in government finances and targeted social protection programmes to cushion vulnerable Kenyans from the effects of economic adjustments.

The latest recommendations come two years after widespread demonstrations forced President Ruto to withdraw the controversial Finance Bill 2024.

Despite the public opposition, the President recently maintained that most of the proposed measures had eventually been implemented through subsequent legislation.

Meanwhile, Kenya’s economic difficulties have continued to attract attention, with annual inflation rising to 7.3 per cent in October from 6.8 per cent in September. Increased transport, food and housing costs have contributed significantly to the pressure facing ordinary citizens.

Government debt has also remained a major concern. Public debt stood at approximately Sh13.475 trillion in August, representing a substantial increase since Ruto assumed office in September 2022.

The IMF’s previous $3.6 billion programme with Kenya ended in April 2025 without the release of its final tranche after disagreements over implementation of agreed conditions.

An IMF team is expected to visit Nairobi in early December for Article IV consultations, during which discussions about Kenya’s economic performance and a possible new financing arrangement are expected to feature.

Central Bank of Kenya Governor Kamau Thugge has previously indicated that the government is interested in discussing a new programme with the lender.

The December engagement could therefore become an important moment for Kenya as the government seeks to manage its debt obligations, strengthen public finances and secure affordable financing without placing additional pressure on taxpayers.

Link; https://www.standardmedia.co.ke/business/business/article/2001561322/imf-asks-kenya-to-broaden-tax-base-ahead-of-december-talks?fbclid=IwZXh0bgNhZW0CMTEAcGRvZgRzcnRjBmFwcF9pZA8yNzUyNTQ2OTI1OTgyNzkAAR-p3cTgSKlCWGqd1ZUl41c86hP1TkVUpeT7qG-3yY1fZhMQ0uBFvlfPSjvDBg_aem_Z-GI6At0UE1C0D6DUIu3RA

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