Kenya’s Treasury Opts for Alternative Funding in Sh4.2 Trillion Budget Amid IMF Exit

Kenya’s Treasury will fund its Sh4.2 trillion budget for the 2025/2026 fiscal year without IMF support. The government and IMF mutually terminated the previous program due to time constraints and weak revenue performance. As a result, Kenya forfeited a potential Sh109.4 billion ($850 million) disbursement.

Treasury Cabinet Secretary John Mbadi confirmed that while negotiations for a new IMF arrangement continue, the budget does not include IMF assistance. Instead, the government is pursuing funding from the World Bank, the African Development Bank, and OPEC. It is also tapping bond markets.

The government planned to use Sh13.9 billion of the IMF funds for balance of payment stabilization, while the rest would have supported the budget. CS Mbadi explained that the decision to abandon the ninth review stemmed from revenue mobilization challenges and timing issues.

“The good news is that we will negotiate this new program. The previous government set up the last one. This time, we will ensure it aligns with global economic trends and our domestic priorities. I expect fruitful discussions ahead,” Mbadi stated.

Despite the shift, he remains optimistic that Kenya will secure higher disbursements in the next IMF program. He highlighted that Kenya’s repayments to the IMF have created room for new financial opportunities.

“Last year, we had an exceptional access facility, but we chose market-based borrowing instead. That option remains available,” Mbadi said.

He emphasized that the IMF’s primary role is not lending and pointed to institutions like the World Bank, the African Development Bank, and OPEC for financing. Kenya is also advancing its bond issuance strategy.