IMF – Politics & Policy media

Situation brief: Kenya’s Finance Bill 2024

Summary

Necessity for Fiscal Reforms: Kenya’s Finance Bill 2024 aims to address fiscal deficits through tax reforms and align with IMF-supported economic stability measures.
Strong Public Opposition: The Bill has sparked widespread protests, reflecting deep dissatisfaction among Kenyans due to increased costs of living and perceived punitive tax measures.
Government Advocacy vs. Public Sentiment: President Ruto promotes the bill as essential for economic health, contrasting sharply with the negative public perception and overwhelming opposition revealed in polls.
Government Response to Protests: In response to intense public backlash, the government amended the Bill to remove some controversial taxes, highlighting the impact of civic engagement on policy.
Protest violence: Protests against Kenya’s Finance Bill 2024 have intensified, resulting in violent confrontations between the police and demonstrators, predominantly young adults. The police response, involving tear gas, water cannons, and live ammunition, has led to numerous injuries and arrests, and notably, one fatality.
Lessons on Public Policy: The situation underscores the importance of public buy-in for successful policy implementation, effective communication, and balancing international standards with local economic realities.

Bangladesh’s economy: Situational brief

The current economic developments in Bangladesh, particularly in its apparel industry and regarding foreign reserves, reveal a mix of past growth and current challenges.

Apparel Industry Growth: Over the past decade, Bangladesh’s apparel industry has seen significant growth. From 2011 to 2019, Ready-Made Garment (RMG) exports from Bangladesh more than doubled, increasing from $14.6 billion to $33.1 billion, marking a compound annual growth rate of 7%.
2023 Slowdown in Apparel Industry: However, 2023 presents a downturn for this key sector. A global slowdown is anticipated to heavily impact Bangladesh’s garment industry, with export growth expected to fall by approximately 3 percentage points. This reduction is attributed to a deceleration in global clothing demand, which is set to add pressure on Bangladesh’s GDP and its dwindling foreign exchange reservess.
Wage Protests and Increases: The Bangladeshi government announced a 56% increase in the monthly minimum wage for garment workers, raising it to $113 from the previous $75. Despite this increase, workers have continued to protest, demanding further wage increases. These protests have sometimes turned violent, with instances of vandalism and clashes with police.

China and multilateral financial institutions

Q: “has China shown the IMF, the deal that has supposedly been struck between the China EXIM Bank and Sri Lanka?”

A: “We have not seen the details of this yet, but this again should come out through our routine engagement.”
Transcript of the Press Briefing on the 2023 China Article IV Consultation Mission

That exchange, in the latest press briefing by the IMF on China, caused us to revisit our post on Sri Lanka’s debt situation and provides an opportunity to expand on the broader geopolitical issues at play.

China’s interactions with multilateral financial institutions embody its larger international ambitions. Through strategic policy choices and leveraging its creditor status, China is actively working to transform these institutions, seeking a balance between its duties and rights, and striving to infuse the global financial governance structure with its own brand of influence.