Kenya is once again facing tough conditions when trying to borrow money from global lenders like the World Bank and the International Monetary Fund. The main reason for this change is the rising conflict linked to Iran. The tension is affecting the global economy in many ways. Oil prices are going up, markets are becoming unstable, and countries are becoming more careful with money. Because of this, lenders are now stricter when giving loans.
In the past, Kenya could get loans under fairly clear and steady terms. But now, things are different. The World Bank and IMF are asking for tougher conditions before they release funds. These conditions may include cutting government spending, increasing taxes, and speeding up economic reforms.
This puts Kenya in a hard position. The government needs money, but it must agree to these strict rules to get it. If Kenya accepts the terms, it may have to make difficult decisions at home. This could mean higher taxes, fewer subsidies, and reduced spending on public services.
At the same time, the conflict linked to Iran is pushing up fuel prices. Kenya imports most of its fuel, so higher prices mean the country spends more money. This also leads to higher prices of goods and services, making life more expensive for ordinary people. The Kenyan shilling may also weaken, adding more pressure to the economy.
Kenyans may pay more for basic goods, face higher taxes, or see fewer government services. While these steps may help the economy in the long run, they can be difficult in the short term.
The government must now decide whether to accept these tough loan conditions or risk running short of money. Either choice comes with serious challenges.
This shows how developing countries are directly affected when the superpower countries have a long-term conflict that cannot be resolved easily.
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By Robai Ludenyi