How Ruto played China, US amid global response to Trump tariffs

President William Ruto lays a wreath at the Monument to the Peoples' Heroes at Tiananmen Square in honour of the martyrs of the struggle for the founding of the Peoples' Republic of China in 1949, on April 23, 2025. [PCS]

President William Ruto on Wednesday slammed the World Bank and the International Monetary Fund, terming them relics of an old world and unable to deal with many challenges facing the globe today.

The President, who spoke at a public lecture in China, said the two institutions are outdated and need radical reform to realign their focus to tackle today's global challenges. Ruto has severally challenged the makeup of global financial institutions, noting their skewed approach when dealing with developing countries.

But while he was throwing punches from Beijing, at the World Bank and IMF, his top officials from the National Treasury were attending the two institutions 2025 Spring Meetings between April 21 and 26 in Washington DC.

This could easily be interpreted as Kenya trying to appease both the East and West. Treasury CS John Mbadi, alongside his Principal Secretary Chris Kiptoo and Central Bank Governor Kamau Thugge, were among Kenyan delegates at the IMF/World Bank meetings.

A post on the National Treasury X platform said: "CS Mbadi reaffirmed Kenya's confidence in its economic prospects and underscored the importance of strong global partnerships in advancing inclusive growth and long-term prosperity."

Kenya has had a complex relationship with the Bretton Woods institutions. This is such that while IMF is one of the largest multilateral lenders, it has been viewed as being behind the push by the government to tax Kenyans more despite tough economic times.

Some of the proposed tax hikes in last year's (2024) Finance Bill, analysts have said in the past, had IMF imprints. The proposals led to anti-government protests leading to the government beating a retreat, although it reintroduced some of them later through other bills that have since been signed into law.

Despite criticism, Treasury has in the past said it cannot disengage with IMF and plans to get into another agreement, following the lapsing of the budget support programme signed in 2021 and which contained conditions such as hikes in taxes for some goods to meet revenue collection targets.

Ruto in yesterday's lecture at Peking University called for the dismantling and rebuilding of the World Bank and the IMF, noting that the institutions are outdated and need to come to terms with today's realities. He noted that the world today is grappling with different challenges than what the institutions were created to tackle nearly a century ago.

"The Bretton Woods institutions recently commemorated their 80th anniversary. Eighty years ago, two-thirds of the world's nations did not exist as sovereign states when this architecture came into being. The IMF was established to buttress the 'gold standard' fixed exchange rate system, a system that collapsed 50 years ago," he said.

"The World Bank was established to rebuild Europe, an assignment now overtaken by events."

He argued that the IMF, World Bank and other institutions were shaped by the ideological divide of the Cold War. Decades after the end of the Cold War, Ruto noted, there remain warriors of that era who are unable to move on.

"In a world where globalisation is no longer an option but an existential imperative, any polarisation is unnecessary, undesirable and untenable," he said.

Other than the borders that have been blurred by globalisation, Ruto noted that other challenges that the world is grappling with today include climate disruption, cyber insecurity and demographic shift.

It is not the first time that President Ruto has called out international financing institutions. He has severally said that they needed to be more inclusive in their approach to development financing, which they lack at the moment.

He has pushed for the democratisation of the boards of the multilateral lenders, a move he says would ensure all members have an equal say in their management.

Ruto repeated the call yesterday in his talk at Peking University, noting that as it is, the global financial architecture presented four challenges, which are intertwined. These, Ruto said, are the challenge of liquidity and persistent climate and economic shocks, inadequate finance for development and climate action, high cost of capital and the problem of recurring debt crises in developing countries.

"Global opinion is divided on whether the current international financial institutions can be reformed. My view is that, as difficult as it is, it is still easier to reform than to abolish them, even though the latter would be the better option," he said.

"At the heart of the Bretton Woods institutions is a fundamental issue: these are shareholder institutions. At the time they were formed, the shareholders were also the primary stakeholders and beneficiaries."

"Both the World Bank and the IMF have evolved into development finance institutions, but the ownership and power remain with the wealthy countries that they no longer serve. The interests of the shareholders and stakeholders and beneficiaries are at great variance. This anomaly became apparently glaring during the IMF SDR (Special Drawing Rights) issuance, where 64 per cent of the allocation ended up with wealthy countries that did not need liquidity support. The poorest countries, which needed it most, received only 2.4 per cent," he said.

He noted that while there are many reforms required in these institutions, the key reform would be changing them into independent institutions.

"I believe that the most consequential is governance changes that will transform them into independent, apolitical global institutions, insulated from the national interest of their shareholders," said Ruto.

"Surprisingly, this requires no more than adopting modern corporate governance best practice. The shareholders should elect directors, and the directors should appoint and supervise competent, professional management."

This week's visit to China saw Ruto become the first African leader to visit Beijing since US tariffs disrupted global trade, presenting Kenya with a unique opportunity to capitalise on the fallout but also putting the country in the direct firing line of US President Donald Trump.

While Kenya is one of the countries affected by the punitive Trump tariffs, the US is a major destination for Kenya products, being the fourth largest buyer of Kenyan goods behind Uganda, Tanzania and Netherlands.

It is such markets that President Ruto aims to secure while navigating these complex international trade dynamics.