Trump’s USAID cuts and tariffs have taken most African countries back to the drawing board in terms of funds. The Kenyan government continues to weigh whether to request funds from the IMF or seek other alternatives.
Upon the freezing of the aid funding, US President Donald Trump additionally imposed reciprocal tariffs on trade. The International Monetary Fund (IMF), therefore, reveals that it expects more requests for funding from African countries.
The funds expected to be offered to African countries will be in terms of loans. Kenya forms part of the list of countries that will seek ways to cushion their citizens with the funds. With a significant surge in sell-off of riskier assets in leading economies, including Kenya, the IMF shall anticipate higher returns and bond yields.
IMF
Therefore, a surge in bond yields will escalate the government’s borrowing costs. Eventually, this will strain the fiscal budgets and possibly limit the ability to fund vital government projects. According to recent reports, the Kenyan government has openly admitted that it will consider borrowing more funds for budgetary purposes.
In the efforts to tone down the effects of Donald Trump’s trade orders, the Washington-based lender offers an option to lend funds to Kenya. Aemro Abebe, the director of the African Department, had this to say: “The poorest and least resilient countries are increasingly turning to institutions like ours.”
“I don’t rule out more African countries seeking support,” Aemro told Bloomberg. The freezing of the USAID affects all the sub-Saharan African countries, where Kenyans formed part of the beneficiaries.
According to reports, the Sub-Saharan countries exported Ksh3.76 trillion (USD29) of goods to the United States in 2023. This proves this region to be the largest market after China, the United Arab Emirates, and India.
IMF’s recommendations
However, the IMF has urged the affected countries to come up with strategies to cushion themselves against the challenges they face. The international lender warned such countries of other nations imitating what Trump has initiated.
