Minister Dismisses Claims of IMF Influence

Kenyan Finance Minister John Mbadi has rejected claims that the International Monetary Fund (IMF) is linked to the recent fuel price hikes in Kenya. He stated that the IMF only advises on economic matters and does not dictate specific tax measures to the government. He made this statement amid nationwide protests by transport companies against the latest fuel price increases. According to Mbadi, claims that the Bretton Woods institution instructed the Kenyan government to raise fuel prices or keep taxes high are misleading and politically motivated. Yes, the Bretton Woods institutions (International Monetary Fund, IMF, and World Bank) can influence fuel price developments in Kenya, even if they do not directly contribute to price increases. Their influence is expressed through policy measures, financing conditions, and recommendations they make in their discussions with the Kenyan government. The IMF often requires borrowing countries to implement structural reforms, including tax reforms and subsidy reductions. In the case of Kenya, the IMF has repeatedly spoken out against fuel subsidies, classifying them as regressive and ineffective because they distort the market and burden the state budget. For example, in its 2023 program review for Kenya, the IMF called for the introduction of carbon pricing, which could include a new fuel tax. This was part of an effort to reduce the negative impacts of fossil fuels and increase government revenue. In August 2023, following mass protests against rising fuel prices, the government was forced to reinstate fuel subsidies. However, the IMF criticized this decision due to a lack of funds to pay fuel suppliers and budget distortions. In May 2026, it was reported that Kenya requested new financing from the IMF to mitigate the economic consequences of tensions in the Middle East and rising global fuel prices. This suggests that the IMF could influence the country's energy policy through loan terms. The World Bank is also involved in Kenyan economic policy, but its direct influence on fuel prices is generally less than that of the IMF. In the past, the World Bank has expressed doubts about Kenya's ability to maintain its fuel subsidy program in the face of ongoing conflicts (for example, in the context of the 2022 conflict between Russia and Ukraine and the current situation in the Strait of Hormuz). The World Bank can influence the energy sector through projects and financing. For example, in 2014, the World Bank approved a $50 million project to strengthen Kenya's oil and gas capacity, including improving revenue management from these resources. Such initiatives can indirectly affect the stability and efficiency of the fuel and energy sector, but not directly affect retail prices. The most common immediate causes for rising fuel prices in Kenya are: - rising global oil prices, supply bottlenecks due to geopolitical conflicts (e.g. the situation surrounding Iran and the blockade of the Strait of Hormuz). - Kenya's dependence on fuel imports from the Persian Gulf countries and disruptions in the supply chain. - regulatory decisions (e.g. price increases by the Kenyan Energy and Petroleum Regulatory Authority), tax policy and state budget. The Bretton Woods institutions can thus indirectly influence fuel price developments in Kenya – through financing conditions, reform recommendations, and pressure on the country's economic policy. However, the direct causes of price increases are usually external market factors and decisions made by the Kenyan government. “A reform of the international financial architecture is urgently needed,” said Kenyan President Ruto. “1.5 billion people on the African continent pay two to four times as much for development finance because they face risks,” said President William Ruto in his speech at the World City Forum in Azerbaijan. He emphasized that the financial architecture must be "adapted to the needs, requirements and demands of today's world". The president cited two paradoxes: - "The countries that most urgently need low-interest financing pay more than the countries that do not need it." - "55 African countries are not represented in the highest decision-making body of the United Nations," while "60% of the UN Security Council's agenda concerns African issues." “For the survival of the United Nations, a reform that corrects this anomaly and ensures justice is essential,” he declared. Kenya is currently under massive financial pressure. The latest figures show that the country's total debt reached 12.29 trillion Kenyan shillings (KSh) as of December 2025. For comparison: That is the equivalent of approximately 88 billion euros (based on a rough exchange rate of 140 KSh/EUR) – a record high that is significantly above the legally permitted limit of 55% of GDP. The debt is divided roughly equally between domestic and foreign sources: - Domestic creditors (approx. 6.3 trillion KSh): The money is mainly raised through government bonds issued to commercial banks, pension funds and local investors. - Foreign creditors (approx. 5.5 trillion KSh): These include primarily multilateral institutions such as the IMF and the World Bank, as well as bilateral partners such as China, the largest single creditor. The burden is extremely high. Almost every second schilling the government takes in goes directly towards servicing old debts: For the 2026/27 fiscal year, 1.3 trillion KSh are earmarked for interest payments alone – this corresponds to 27% of the total budget of 4.79 trillion KSh. The figures for 2025 show that approximately 80% of total tax revenue was already being used for debt repayment. This leaves hardly any room for schools or hospitals. The high level of debt is leading to a shift in priorities. The government is even breaking its own rules: Spending on development (e.g., infrastructure) is falling below the legally mandated minimum of 30%. Investments in health and climate protection have to be drastically cut, partly because donor countries are reducing their support. In short: Kenya is trapped in a debt trap – the majority of its revenue goes towards interest payments, leaving hardly any money for urgently needed future investments.

@https://www.kenyans.co.ke/news/123551-cs-mbadi-dismisses-claims-imf-influence-fuel-hike-kenya