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Kenya’s man at IMF

NAIROBI, October 7 – Peter Gakunu, a Kenyan, is a Director with the International Monetary Fund, achieving what many Africans have not.

Prior to joining the Bretton Woods Institution, Mr Gakunu had served as a Sspecial Advisor to the Cabinet in charge of economic reforms between February 2003 and October 2004.

He had also been part of the Richard Leakey ‘Dream Team’ of technocrats that had been put together by the World Bank and UNDP to advise the government on reforms, and served as Economic Secretary and Director of Planning at Treasury until December 2002.

Capital Business sought to find out how the man, who’s four year tenure expires in October, has been carrying out his duty.

Q. When were you appointed as the IMF Executive Director?
A. I was elected the IMF Executive Director, representing the Africa Group 1 Constituency on 1st November 2006 after serving as Alternate Executive Director from 1 November 2004.

The Africa Group 1 (AFG1) constituency covers 21 countries in Sub-Sahara Africa. My constituency covers a variety of countries from post conflict countries like Burundi and Liberia, to more performing economies like Kenya, Nigeria and South Africa. It covers countries with IMF programs to countries that have graduated from IMF programs and to emerging economies. It is a varied constituency.

By the way we have 24 constituencies that we call chairs in the IMF. I represent one of these constituencies.

Q. Many people think that there are some posts that Africans just cannot hold. What is your view about this notion? Do you think you managed to prove such thinkers wrong?
A. I agree with you that many people believe that there are some posts that Africans just cannot hold. I am not one of these people. I come from very humble surroundings without any real godfathers. Yet I have managed to do many things that I never imagined that I would ever do. So I think that in being where I am I must have proved all those people wrong.

My firm belief is that there is nothing that anyone, African or not, cannot achieve if you just put your mind into it. I have always hoped that my experience would one day serve as an example to the young people. I still hope that this will be so one day.

Q. Have you managed to change the negative perception the West has on Africa?
A. The IMF Board now seems to have changed its perception of countries like Kenya, which as you know was singled out for corruption specifically, and governance slippages in general. The recently concluded ex post assessment by the Fund, while it apportioned some blame on the Kenyan authorities, noted that the IMF was unduly pressurised by donors in taking some of the decisions, and the donors for pursuing an agenda that was not fair or equitable in comparison with the wider Fund membership. Most members of the Board have a generally favorable disposition towards the countries in my constituency. This positive perception has been particularly evident over the past two years with the improvement in macroeconomic frameworks of these countries.

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Q. What, in your view, should Kenya do differently to achieve its economic growth this year and its Vision 2030?
A.  Growth prospects for Kenya are tilted on the downside, particularly from rising food and fuel prices and weakening global demand and still the unfolding global financial turmoil. Both in the short and medium term, Kenya will need sound policies and continued structural and governance reforms to maintain macroeconomic stability, restore strong growth, and advance toward the Vision 2030 objectives..

Q. Kenya has in the last few years been able to finance 95 percent of its budget. Do you think there is a need to have the IMF office in the country?
A.  Kenya is one of the 185 members of the IMF. While Kenya is less dependent on donor assistance for financing its budget, it still needs assistance and foreign direct investment. The seal of approval provided by the IMF is therefore essential, because it acts as a signal not only to donors but also to investors generally. Thus, like all the Fund membership Kenya needs the IMF’s monitoring role and advice. The office of the IMF in Nairobi serves as a bridge between the Kenyan authorities and the IMF in Washington. In my view it can serve a very useful role if properly harnessed by the authorities. This said, the IMF has not always been seen as a neutral player in Kenya’s relations with the donor community which had rightly made the Kenyan authorities suspicious of the IMF. With improved relations, this perception should now change and the office should continue to play a greater role in this relationship.

Q. What are some of your most memorable achievements during your tenure?
A. Work in the Board of the IMF is normally carried out on a consensus basis. However, in most cases decisions are made on the basis of each chair’s voting power. Therefore, it is the major shareholders that carry the day. Under such an atmosphere, a chair like mine, which has less than 3.5 percent voting power, has to struggle to push through its agenda. In this context my most memorable achievements have been to see most of the countries that I represent move from dependence on IMF balance of payments support to self sufficiency.

Most of these countries have moved from less onerous Fund surveillance to a more mature relationship. This surely must be one of my memorable achievements because many of the countries that I represent were under BOP support from the Fund and were undergoing HIPC and MDRI debt relief. Secondly, the debt relief for Liberia must surely be one of the greatest achievements during my tenure. During this period I also saw the appointment of the new Director of the African Department and the selection of the Managing Director of the IMF and of course Kenya complete, for the first time, a full Fund program. I believe that these moments will always stand out in my mind.

Q. Your term is ending soon. What would you like to be remembered for?
A.  I come from very humble surroundings and as such my ambitions could perhaps be not that big. Nevertheless, I would like to be remembered as having contributed positively to the cordial relations between most of the countries that I have represented with the IMF over the past four years. In particular, seeing Kenya successfully complete a full program with the Fund must be particularly rewarding for me.

Q. Will you be returning to Kenya after the expiry of your term?
A.  Sure, Kenya is my home. I might not return immediately, but I will always be there. I intend to take a short break and decide on where I go next. I am still young by today’s standards.

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