IMF cautions Kenya over reliance on China for loans
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IMF (The International Monetary Fund) warns Kenya and other Sub-Saharan countries over decline in China loans
IMF (The International Monetary Fund) warns Kenya and other Sub-Saharan countries over decline in China loans.
The International Monetary Fund (IMF) has warned Kenya and other countries in the Sub-Saharan region over China’s expected slowdown in economic growth, which could have an impact on African economies.
China’s loans to the region may decrease with the countries asked to find alternative sources of income, according to a press release on Thursday.
Notably, the IMF noted that over the previous year, financing for infrastructure to Sub-Saharan African nations had already decreased by Ksh151 billion, which was the biggest drop registered in 20 years.
Kenya has been identified as one of the top five recipients of China loans, which have been utilized for a number of projects, including 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.
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“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 per cent before 2005 to 17 per cent by 2021,” read the statement in part.
IMF therefore advised African countries to adopt other measures to meet their demand for resources such as the promotion of inter-trade in the continent and undertaking tax reforms.
Leveraging on mineral exports was also advised as a way of boosting the country’s coffers.
“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 favourable business environment, investing in infrastructure, and deepening domestic financial markets,” read the statement in part.
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