THE INTERNATIONAL Monetary Fund (IMF) will be vigilant over possible pre-election economic shifts by the Kenya Government that could knock agreed reforms off course.

Although the Fund is pleased with anti-corruption initiatives taken by the government in hopes of unfreezing a $320 million aid programme, the IMF's head of mission for Kenya, Mr Menachem Katz, raised the spectre of what he referred to as "election economics."

"The IMF will be watching closely in the coming months to see if the Kenyan government makes politically-inspired policy decisions that threaten the country's fiscal stability," Mr Katz said last Thursday. The IMF monitors the government's success in hitting budgetary and fiscal targets on a quarterly basis.

However, political considerations linked to the approaching election will play no role in the decision on whether to resume lending to Kenya, Mr Katz said, in response to a suggestion that an IMF go-ahead prior to the election would help the ruling party Kanu's chances of holding on to power. 

"We cannot reward or penalise a country for having what will hopefully be fully democratic elections. We cannot say to a country that just because you're having an election, we are suspending our dealings with you until after your election. If a country does what it is committed to do, one must move forward," he said.

An IMF mission is due to travel to Kenya in the second half of April, with the prospects of renewing lending to Kenya on the part of both the IMF and the World Bank appearing brighter now than at any other time since the funding was suspended in 2000. 

Encouraging progress is being made in reforming the country's procurement system and in prosecuting officials suspected of violating anti-corruption laws. "Creation of an effective framework for combating corruption has always been the key issue requiring resolution before aid can be resumed," Mr Katz said. 

The question that must be satisfactorily answered now , he said, was whether the authorities had developed an alternative approach that did not have to rely on the defunct Kenya Anti-Corruption Authority (Kaca).

Kaca was established in 1997 in response to donor concerns but suspended following a court ruling in December 2000. The court found that the structure and powers of Kaca violated the Kenyan Constitution. Parliament then failed in August 2001 to pass legislation that could have led to Kaca's resurrection in a constitutionally acceptable form. 

However, by the end of last year, the IMF had softened its insistence that only by reviving Kaca could Kenya meet the conditions for a renewal of aid. The Fund suggested, instead, that an anti-graft unit established within the Kenyan Police might prove an acceptable alternative to Kaca, provided it showed tangible evidence of progress in the fight against corruption. 

Mr Katz said the police unit "seems to be doing a good job." He noted that the unit had taken up some cases that had been on Kaca's agenda and is facilitating the prosecution of two former Permanent Secretaries on corruption charges. 

Mr Katz said he was also encouraged by implementation of a new government procurement system intended to address what has been "a major area of abuse." Successful application of the new safeguards against procurement fraud would mark "an important change in the landscape," he observed. 

If the IMF team coming to Kenya next month were to recommend resumption of lending following its return to Washington, the Fund's board would probably take up the matter two or three months later, Mr Katz said. The World Bank would probably act to renew its own assistance to Kenya soon after favourable action on the part of the IMF.