IMF Warns Kenya of Economic Consequences Over China’s Decline
The International Monetary Fund (IMF) has issued a warning to Kenya and other Sub-Saharan nations regarding the anticipated impact of China’s economic development slowdown on the economies of African countries.
It was suggested in a press release dated Thursday that China’s loans to the region might be reduced, requiring the recipient nations to find alternative revenue streams.
Significantly, the IMF emphasized that infrastructure loans extended to Sub-Saharan nations had decreased by Ksh151 billion over the previous year. This is the largest reported decline in twenty years.
Kenya is among the nations that have been identified as being among the foremost recipients of Chinese loans, which have been utilized for a multitude of endeavors such as the Standard Gauge Railway (SGR).
“The cutback marks a shift away from big-ticket infrastructure financing, as several African countries struggle with escalating public debt.
“Chinese loans to the region rose rapidly in the 2000s, with the country’s share of total Sub-Saharan African external public debt jumping from less than 2 percent before 2005 to 17 percent by 2021,” read the statement in part.
Hence, to satisfy their resource requirements, President William Ruto and his colleagues were recommended to implement alternative strategies, including fostering inter-continental trade and implementing tax reforms.
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Exploiting mineral exports was also recommended as a strategy to augment the nation’s revenue.
“The strong demand for minerals that support renewable energy development could provide an opportunity for countries to forge new trade relationships and develop more local processing capabilities.
“Countries can improve their competitiveness by creating a favorable business environment, investing in infrastructure, and deepening domestic financial markets,” read the statement in part.
Significantly, the IMF’s admonition arrived weeks after Ruto attended the Belt and Road Initiative (BRI) forum in China, during which he engaged in bilateral discussions with Chinese President Xi Jinping.
Loans totaling at least Ksh150 billion (USD1 billion) were sought by Ruto to fund stalled initiatives. There has been no indication since the visit as to whether Ruto and the Jinping administration were able to reach a consensus.
Despite this, the Head of State managed to reach Ksh688 billion in investment agreements with private corporations. Achieved agreements comprised Ksh24.2 billion earmarked for the construction of the Konza Medical City.
IMF Warns Kenya of Economic Consequences Over China’s Decline