President William Ruto and International Monetary Fund (IMF) Managing Director Kristalina Georgieva have held talks in Nairobi in the race to unlock a new funding before July.
Kenya says it is nearing the end of talks with the IMF on the possibility of a new a multi-billion shilling funding programme in discussions that began in March 2025 without bearing fresh loans.
The Treasury has omitted IMF funding from national budgets for four fiscal years to June 2030, but is keen on new loans amid fears of external shocks in the wake of the US-Israel war against Iran. Kenya has been without an IMF programme since March last year when the fund froze loans after the country failed to meet key performance indicators.
‘Most likely, we will have an agreement in June or July on whether we get a funded programme, but I cannot say with certainty when our conversation with the IMF will conclude,’ John Mbadi, the National Treasury Cabinet Secretary.
Ruto and IMF’s Ms Georgieva held talks on Tuesday on the sidelines of the concluded Africa Forward Summit as the fund’s senior executive highlighted discussions on reforms which would underpin a new programme.
The IMF has had prior missions to Kenya and secondary discussions in Washington over the last 12-months but is yet to conclude its assessment on Kenya’s request for fresh support.
‘We discussed the reforms needed to unlock more private investment across Africa, as well as progress on Kenya’s own reforms and continued fund support,’ Ms Georgieva said in a social media post.
Kenya omitted funding from the IMF in the budget starting July in the wake of uncertainty whether fresh talks could unlock multi-billion shillings loans.
Documents tabled in the National Treasury showed that Treasury was not expecting new flows from either of the fund’s options including the extended credit facility (ECF), the extended fund facility (EFF) or the resilience and sustainability fund.
The country would be obligated to adhere to a strict reform path including commitments to significantly cut the fiscal deficit, new revenue measures and State-owned enterprises (SOE) interventions.
Funding from the IMF has been associated with tough lending conditions, among them; higher taxes, job freezes and spending cuts.
The National Treasury has noted that the appeal of an IMF programme lies in its support for structural and fiscal reforms as opposed to funding.
‘IMF is not supposed to fund Kenya. We just need to be in a programme with them to support the strengthening of our fiscal position in the case of shocks like the ones we have now,’ added Mr Mbadi.
The World Bank Group, a sister organisation to the IMF that mostly disburses funds for development projects, is widely expected to take over as Kenya’s lead source of concessional/cheap external financing.
The bank’s development policy operations (DPO) is expected to anchor the cheap external financing, facilitating flows of Sh170.5 billion in each cycle, beginning July 2026 to June 2030.
World Bank loans tend to have longer tenures and carry less stringent conditions when compared with the IMF facilities which are short-to-medium term and tackle immediate economic concerns.
Kenya has faced a dilemma in exercising its access to IMF resources, as it seeks on one hand to appear as a mature economy, capable of raising resources from international capital markets.
On the other hand, Kenya is anxious of being locked out of capital markets if interest rates accelerate as a factor of the ongoing conflict.