Kenya has been listed among 10 countries currently facing high financial pressure in a report from the World Bank.
In 'The Great Reversal: Prospects, Risks, and Policies in International Development Association Countries Report,' the World Bank notes that other countries in this category are Burundi, Fiji, Gambia, Ghana, Malawi, Mozambique, Pakistan, Togo and Zambia.
These IDA countries are in the current predicament due to financial needs surpassing 10 per cent of their Gross Domestic Product (GDP).
According to the report, borrowing conditions for these countries have worsened leading to a further decrease in fiscal stability.
Additionally, IDA countries are also at risk of losing a decade of development due to overlapping crises in recent years such as the pandemic, high cost of living and political tensions in various regions across the globe.
"With heightened vulnerabilities and limited buffers to respond, IDA countries are particularly exposed should key risks—many beyond their control—materialise," read part of the report.
Per the report, some overlapping crises facing these 75 IDA countries include, slow output growth, subdued trade and investment growth, inflation and food insecurity, and public debt.
On inflation and food insecurity, the World Bank explained that the Russia-Ukraine war has resulted in a significant upswing in energy prices and pushed global food prices to all-time highs.
"This inflationary spike eroded food affordability in many IDA countries. Currency depreciations in several countries added to inflationary pressures," read part of the report.
In Kenya, the inflation rate hit an all-time high in October 2022 at 9.6 per cent. Over the recent months, the inflation rate has dropped to 5.7 per cent in March 2024.
On the upside, the World Bank noted that Kenya and other IDA countries have a chance to boost their economic status and development through various moves.
World Bank stated that these nations need to address substantial investment needs. Additional investments are required to achieve the Sustainable Development Goals (SDGs) related to human and physical development while addressing climate risks.
Additionally, Kenya needs to draft and implement policies to drive progress. Through this, Kenya may join other IDA graduates such as China, India and Korea. Carefully implementing policies which are tailored to the country's circumstances is the key to durability and success.
"Policy packages should be country-owned and tailored, but there are some common threads. Successful packages often include fiscal and monetary interventions, as well as structural reforms, including strengthening macroeconomic policy frameworks, expanding cross-border trade and financial flows, and improving the quality of institutions," reads the report in part.
