Kenya and the International Monetary Fund (IMF) have agreed to commence formal discussions for a new lending programme, signaling a shift from the ninth review of the existing $3.6 billion loan. This development comes as Kenya grapples with escalating debt-servicing costs resulting from extensive borrowing over the past decade.
The current IMF programme, initiated in April 2021, is set to expire next month. Throughout its tenure, the programme has encountered challenges, including public protests against proposed tax hikes and debates over new borrowing arrangements with the United Arab Emirates.
Cabinet Secretary (CS) for The National Treasury John Mbadi confirmed that the government has formally requested a new programme from the IMF. He acknowledged that the ninth review under the existing arrangements would not proceed, emphasizing the need for continued support to manage the country’s debt obligations effectively.
As of October 2024, approximately $3.12 billion had been disbursed under the current programme. However, Kenya’s debt-to-GDP ratio has surged to 65.7%, surpassing the 55% sustainability threshold. This rise in debt levels has intensified the urgency for a new lending arrangement to ensure fiscal stability.
In February 2025, Minister Mbadi indicated that discussions with IMF officials were underway to secure a new lending programme before the current one expires in April. He highlighted the importance of these negotiations in light of the country’s heightened debt-servicing costs and the need for continued economic support.
The IMF has acknowledged Kenya’s economic resilience, noting above-average regional growth and improved external inflows. However, the institution has also emphasized the necessity for enhanced governance and transparency to address fiscal challenges effectively.