By Ebi Kesiena
Kenya has formally requested a new loan programme from the International Monetary Fund (IMF) as the country navigates growing fiscal challenges and mounting debt obligations.
In a statement, the IMF confirmed receiving Kenya’s request during a recent visit by its delegation. As a result, the ninth review under the current Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programmes will not proceed. Instead, discussions will focus on a new financing arrangement.
“The Kenyan authorities and IMF staff have reached an understanding that the ninth review under the current EFF/ECF programmes will not proceed. The IMF has received a formal request for a new programme and will engage with the government moving forward,” the IMF stated.
Kenya has been a major recipient of IMF funding in recent years, with the existing $3.6 billion (Sh465 billion) facility set to expire next month. Of this amount, $3.12 billion (Sh403 billion) had already been disbursed by October 2023, leaving a final tranche of approximately $480 million (Sh62.03 billion), which will now be forfeited under the new arrangement.
The Kenyan government has relied on IMF loans to supplement tax revenues and fund key budgetary programmes. However, the country’s growing debt burden, driven by years of heavy borrowing has put pressure on public finances. As of June 2023, Kenya’s debt-to-GDP ratio stood at 65.7%, exceeding the 55% sustainability threshold.
Faced with looming debt repayments, the government is working to secure alternative funding sources while ramping up domestic revenue collection to meet spending needs. The shift to a new IMF programme signals continued reliance on external financing as Kenya grapples with economic headwinds.
Negotiations between the IMF and Kenyan authorities are expected to determine the structure and terms of the new funding arrangement in the coming weeks.
