The International Monetary Fund (IMF) has offered Sub-Saharan countries, including Kenya, three strategies to address resistance to fiscal reforms, such as the introduction of new taxes.
In new recommendations contained in the report titled Resilient Strategies and Credible Anchors in Turbulent Waters, the IMF stressed that the sustainability of the new policies introduced by the national government depend on them being accepted by citizens.
Recognising that there is often resistance to such reforms, the Bretton Woods institution advised the Sub-Saharan governments to implement new policies, like taxes, gradually.
The IMF's recommendations come in the context of recent tax changes in Kenya, including the introduction of taxes like the Housing Levy and a 16% VAT on fuel which have faced public opposition due to their impact on the cost of living.
Furthermore, the government has plans for additional salary deductions, such as the proposed 2.75% deduction for the National Health Insurance Fund (NHIF).
"Resistance to reform is very difficult to overcome in the fiscal area since the costs of the status quo are not always visible, while many new measures reduce, at least temporarily, the welfare of broad segments of society," read the report in part.
"The issue of public acceptability should be at the centre of policy design for instance, by properly sequencing the reform process or conceiving compensatory measures."
IMF also advised Ruto and his fellow Sub-Saharan presidents to carry out communication campaigns to enlighten the public about the new fiscal policies.
The international financial institution contends that such campaigns provide the government with avenues to inform the population of the long-term benefits & consequences of initiating or failing to undertake the reforms.
"More generally, public acceptance of reforms depends on the ability of governments to convince the population that they will use public funds in an efficient, fair, and transparent manner," read the report in part.
IMF noted that its recommendations, such as bolstering tax administration management and human resources, as well as implementing digital tax systems, have contributed to enhanced revenue collection in countries like Rwanda.
Kenya, among others, has been recognized for adopting a comprehensive medium-term revenue strategy (MTRS) as part of these efforts
