Lobby groups call for Special Drawing Rights of people’s recovery in Kenya

The Christian Aid International has called on government to develop a clear legal framework in oversight institutions so as to hold it accountable and to entrench transparency and accountability in Special Drawing Rights (SDRS) use in line with the Constitution of Kenya. 

In a joint effort with Bernard Njiri of the Institute of Public Finance (IPF), the lobby group tasked with creating and managing transformational partnerships with local civil society organisations, national and county governments, public authorities, the private sector, churches, and religious organisations with shared values in poverty eradication called on the government to publish and publicise information on SDR utilisation, including information on any arrangement(s) between. 

“The International Monetary Fund (IMF) board on 23rd August 2021 approved a general SDR allocation of SDR 456.5 billion (equivalent to US$650 billion) aimed at addressing the global need for reserves, foster confidence, and support a resilient and sustainable global recovery. The allocation came at time when many economies most especially developing economies were struggling with the adverse impacts of the COVID- 19 pandemic,” observed in a statement. 

The IPF through research, training, and capacity building is responsible of advancing the concepts of transparency, accountability, equitability, efficiency, and fiscally disciplined public finance management systems for enhanced service delivery and economic development in Kenya and the region. 

In order to ensure macroeconomic sustainability, including external and monetary sustainability, the lobby organisations argue that the use of SDR holdings must be structured. 

“In a letter of intent to the IMF, the Kenyan government indicated that half of SDR allocation would be on- lent to the National Treasury, while the other half would be retained at the Central Bank of Kenya (CBK) to boost the country’s official foreign exchange reserves that had come under intense pressure from the rising cost of the imports as well the appreciation of the US dollar. The National Treasury projected to borrow approximately Sh41.8 billion from the CBK,” claimed in a statement. 

The organisations asserted that the National Treasury erred on the side of fiscal restraint by reporting the IMF’s SDR grant of Sh40.8 billion as part of government borrowing that supported its fiscal deficit in FY 2021/22 in the draft 2022 Budget Review and Outlook Paper (BROP). 

The government claimed that it used some of the borrowed money to pay for 17.7 per cent of recurrent expenses and the repayment of external loans. 

 “From our review we could not establish whether the government directed the SDR allocation to specific sectors or programmes. This partly because the IMF does not attach conditions on the use of SDRs by recipient countries. Similarly, the government has not developed a legal framework on SDR utilisation and reporting, thus creating a room for little or no transparency and accountability around the use of SDRs,” read the statement. 

According to the lobbyists, the government has not come out clear whether the profits from the SDR allocation were used to fund certain programs or expenditures.