The IMF (International Monetary Fund) has put the first roadblock in the ongoing negotiations with Nairobi by insisting that President William Ruto responds to audit queries contained in a Governance diagnostic report, before the Fund can enter into a new deal with Kenya.
Findings of this technical assessment will enable the Kenya Government to implement Governance reforms to deal with corruption and support economic growth
After the Anti Finance Bill protests in June 2024 that saw the withdrawal of KSh 2.7 Billion in Tax hikes, a KSh 600million disbursement was delayed.
Kenya formally requested the diagnostic from IMF after Western Nations pushed for it. The draft report was expected to be shared with Kenya authorities. A full assessment report is expected to be published, if Kenya gives the consent.
The IMF has in its latest Outlook , revised its Kenya Economic Growth Rate to 4.5% in 2026, in light of the Gulf Crisis, from 4.9% in 2026.
Kenya’s somewhat sluggish growth momentum happens even as the Country enters the 16 months’ period as the August 2027 polls count down begins, with President William Ruto seeking for re-election and facing disjointed opposition.
In 2026, Kenya’s economy faces several challenges, the biggest being high public debt. Around 65% of revenues is now allocated to servicing both domestic and foreign debt, cutting of expenditure on crucial sectors.
The East African Nation’s fiscal deficit is projected to widen to 5.1% of GDP in 2026, reflecting low export earnings and sluggish revenue collection.
The Gulf War is already affecting Kenya’s export sector as well as financial market corrections.
While the CBK has been aggressive in lowering the benchmark lending rates, this policy stance has eased as the Gulf War effects spill over to the local economy.
IMF Outlook for Kenya in January 2026 has been revised on Gulf Crisis Effects
IMF said in its January World Economic Outlook that technology investment (including AI), fiscal and monetary support, accommodative financial conditions and private sector adaptability would offset trade policy shifts, mainly recent tariffs by US President Donald Trump’s administration, which have disrupted international trade patterns.
The Country’s growth forecast by the Central Bank of Kenya (CBK) is 5.2 per cent in 2025 and a further growth of 5.5 per cent this year, placing it above IMF’s projections.
This growth is expected to be supported by continued resilience of key service sectors and agriculture, and the continued recovery of the industry sector.
“The outlook is however subject to risks, including adverse weather conditions, elevated trade policy uncertainties, and geopolitical tensions,” CBK governor Kamau Thugge said during a post-Monetary Policy Committee briefing on December 9th 2026.
Private sector credit is rebounding, growing five per cent% year-on-year by September 2025, supported by lower lending rates and an accommodative monetary stance.
“Economic growth momentum could be further sustained by addressing key barriers to competition, which would also lead to more and better paying jobs, and lower prices to consumers,” said Qimiao Fan, World Bank Division Director for Kenya, Rwanda, Somalia, and Uganda.
Kenya’s economic growth forecast by KNBS
The economy defied erratic weather and policy uncertainties to grow 4.9% in Q3 2025, Kenya National Bureau of Statistics latest data shows, supported mainly by a rebound of the construction sector, mining and growth in manufacturing and transport sectors.
This was an improvement compared to the 4.2 per cent growth recorded in the third quarter of 2024, as the economy continued on a post-pandemic growth trajectory despite both domestic and global shocks.
Kenya’s economic growth faces several hurdles among them high national debt, fiscal deficits, rising cost of living, unemployment (especially youth), climate vulnerability and weak revenue collection, alongside structural issues like inequality and slow industrialisation.
The latest Quarterly Gross Domestic Product Report by KNBS however points to Kenya’s strong macroeconomic environment, pegged on low interest rates in the market, stable inflation and string national productivity mainly in key sectors of the economy.
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