Goldenberg Commission of Inquiry Report - Mars Group Kenya

dwindling. A witness, professor, T. Ryan, a professor in Macro-
Economics, and who for a long time worked in various capacities in the
Ministry of Finance, testified that the economic slump was due to various
factors. Chief of those, he said, was macro-economic instability. There
was a high turn over of economic managers in the Ministries of Finance
and Planning. There were no clear economic policies on key aspects.
The political policies of the government scared off both multilateral and
bilateral donors who, over the years, gradually reduced their donor
support and investment. Consequently, the government increasingly fell
back on local borrowing, with the result that its overseas debt servicing
became irregular.
64. The credibility of the government’s political and economic policies
was lost. The government was put under extreme pressure from both the
World Bank and the IMF to change its macro-economic policies, more
particularly on the aspect of market controls. The two Institutions
demanded that the market be liberalized. These institutions increasingly
interfered with formulation and implementation of economic policies in
Kenya. For instance whatever economic proposal the government came
up with was subject to approval of the World Bank and IMF. Hence the
various economic schemes which the government later adopted, and
which we shall discuss later in this report, were either adopted at the
behest of these two institutions or with their express approval. In
addition the two institutions did not favour protective economic policies
and pressed for the repeal or removal from various local legislation of all
manner of controls. Top on the list of those legislations were the Price
Control Act Cap 504 Laws of Kenya and Exchange Control Act, Cap
113 Laws of Kenya. The economic policies in place at the time leaned
towards the protection of certain local industries and regulation of the
exportation of foreign exchange out of the country to ensure that limited
foreign exchange reserves were not depleted below a certain limit.