Kenya's funding strategy has shifted to a focus on concessional loans, given the uncertainty surrounding its access to international bond markets, according to a statement from the National Treasury & Economic Planning of Kenya published on Tuesday on their X (formerly Twitter) account.
"Global shocks associated with drought, inflation, unpredictable commodity prices, and tighter external financing conditions" have strained East Africa's national finances, Finance Minister Njuguna Ndung'u said in the statement.
"In light of the uncertainty surrounding access to global bond markets, the government strategy has shifted to focus on seeking out concessional funding from the multilateral lenders like IMF [International Monetary Fund] and the World Bank and bilateral development partners," Ndung'u stated.
The Minister continued, saying that the country is "stepping up efforts to improve the microeconomic environment and carrying out the necessary structural reforms. Kenya will access commercial financing when global market conditions improve."
Investors have been keenly monitoring the country's ability to secure funds prior to the $2 billion Eurobond grows in June next year: an IMF mission team for the sixth time reviewed Kenya's programs under the Extended Fund Facility and Extended Credit Facility.
These programs offer "financial assistance to countries facing serious medium-term balance of payments problems" and "medium-term financial assistance to low-income countries with protracted balance of payments problems" respectively, according to the IMF.
Also, the team reviewed the implementation of the Resilient Sustainability Facility program for the first time. This program "provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including those related to climate change and pandemic preparedness," the IMF explained.
The East African nation has successfully passed these reviews, according to the statement.
The World Bank predicted on Monday that Kenya would receive $12 billion in financing over the next three years. The IMF and Kenya also reached a staff-level agreement to increase the IMF's lending program by about $940 million, bringing the total IMF commitment under the agreement to about $4.45 billion, Ndung'u wrote in the statement.
The Minister concluded by highlighting the positive momentum in the Kenyan economy, saying that despite liquidity issues and other challenges, real GDP grew by 5.4% in the first half of 2023. He added that the government is ready to take all necessary measures to boost the country's economy.
"Kenya is committed to take all necessary measures to revitalize its economy and ensure its long-term health and stability," the ministry stated.
Despite the positive assessments of the Kenyan ministry, the country's President William Ruto has recently referred to the international loan system as unfair and unjust. It separates wealthy countries from others that should "look for help," he said in an interview to a French media outlet in June.
Moreover, his South African counterpart Cyril Ramaphosa called for reform of the IMF and World Bank at the New Global Financial Summit in Paris in June, stressing that "the industrialization and economic development of the Global North was achieved at the expense of the Global South."
Furthermore, the IMF and the World Bank have been criticized by some other organizations.
Thus, in October, a group called the Fight Inequality Alliance, which seeks to coordinate international efforts to create a more just and equitable economic system called the World Bank and IMF "the biggest scam of the century" as these organizations were established with the intention of advancing the interests of the richest nations while defending those of the poorest nations.
UN Secretary-General António Guterres also disclosed, while attending the G7 conference in Hiroshima on May 21, that African countries had only gotten one-eighth of the financial aid from the IMF that the G7 countries had received.