Kenya is set to request fresh funding from the International Monetary Fund (IMF), despite Treasury Cabinet Secretary John Mbadi’s recent commitment to cut reliance on external borrowing.
Central Bank of Kenya (CBK) Governor Kamau Thugge confirmed on Wednesday, August 13, that the government will pursue a funded IMF programme. The announcement comes ahead of an IMF mission to Nairobi next month to discuss terms for a new arrangement.
“Our preference will be to have a funded programme, and that is what we have expressed to the IMF board,” Thugge told reporters during a post-Monetary Policy Committee briefing.
The move marks a policy shift, as many had expected Kenya to opt for a non-funded IMF programme after challenges in meeting the conditions of its last facility. In March, the country abandoned the final review of a $3.6 billion (Ksh465 billion) Extended Fund Facility and Extended Credit Facility, missing out on a final $800 million (Ksh103 billion) disbursement.
The decision to scrap proposed tax hikes in the 2024 Finance Bill, following deadly nationwide protests, was a key reason Kenya failed to meet IMF’s revenue and deficit reduction targets.
Under the 2025/2026 Budget, the Treasury plans to borrow Ksh923.2 billion, with Ksh287.7 billion from external lenders and Ksh635.5 billion from domestic sources.
The push for a new IMF loan comes as global ratings agency Moody’s warns that Kenya’s debt servicing costs will remain high due to weak revenue collection systems and unpredictable spending patterns.
Kenya’s total public debt now stands at Ksh11 trillion, split between Ksh5 trillion in domestic debt, largely from Treasury Bills and Bonds, and Ksh5.09 trillion in external obligations to multilateral, bilateral, and commercial creditors.
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