Kenya and the International Monetary Fund (IMF) have agreed to begin formal talks on a new lending program, scrapping the ninth review of the current $3.6 billion loan agreement.
The government is seeking continued financial support to stabilize the economy after rising debt-servicing costs strained its finances following years of heavy borrowing.
“The Kenyan authorities and IMF staff have reached an understanding that the ninth review under the current Extended Fund Facility and Extended Credit Facility programs will not proceed,” IMF Mission Chief Haimanot Teferra said in a statement following a visit to Nairobi.
Teferra also confirmed that the IMF has received a formal request from Kenya to establish a new financing arrangement.
The current program, launched in April 2021, is set to expire next month. However, its implementation faced setbacks due to deadly anti-tax protests last year and a dispute over new borrowing from the United Arab Emirates.
By October 2024, the IMF had approved $3.12 billion for disbursement under the existing agreement.
President William Ruto’s administration has been scrambling to secure alternative financing, including enhancing revenue collection, to meet increasing expenditure demands and manage the country’s soaring debt obligations.
According to Finance Ministry data, Kenya’s debt-to-GDP ratio stood at 65.7% as of June last year, far surpassing the 55% sustainability threshold.
