IMF Team in Nairobi as Kenya Seeks New Loan Deal

An International Monetary Fund (IMF) team led by mission chief Haimanot Teferra will be in Nairobi from September 25 to October 9 to begin talks with Kenyan government officials on a potential new financial programme that could include a lending package and measures to support external debt repayments.

In a statement ahead of the anticipated visit, Teferra said the engagement follows a formal request from Kenya.

“The IMF remains committed to supporting Kenya in its efforts to maintain macroeconomic stability, safeguard debt sustainability, strengthen governance and promote inclusive and sustainable growth for the benefit of the Kenyan people,” Teferra stated.

Adding;

“We look forward to constructive engagement with the authorities and other stakeholders during our visit to Nairobi.”

For the 2025–26 financial year, the government has earmarked about Ksh 1.9 trillion for debt servicing. Of this, Ksh 1.09 trillion will go to interest payments, while Ksh 646.4 billion will be used to repay principal debt. The figure accounts for a significant share of the budget, straining allocations to other sectors.

Kenya’s public debt stood at 66.6 per cent of GDP as of September 2024, surpassing international thresholds and raising fiscal sustainability concerns.

Kenya’s previous IMF arrangement, worth $3.6 billion, ended in April after its expiry. Earlier in March, the government and IMF had abandoned the final review, which meant Kenya missed out on a final $800 million disbursement.

The programme, approved in 2021, was designed to support post-COVID recovery and help reduce debt vulnerabilities.

The Central Bank expects the economy to remain resilient despite fiscal pressures. It projects real GDP growth of 5.2 per cent in 2025 and 5.4 per cent in 2026, supported by services, agriculture and a recovering industrial sector.

The Treasury has already moved to trim government spending for 2025–26 by at least Ksh 21.1 billion. The Draft 2025 Budget Review and Outlook Paper lowers the total budget to Ksh 4.269 trillion, down from the previously approved Ksh 4.291 trillion.

Kenya is also targeting to reduce its fiscal deficit to 4.8 per cent of GDP this year, from 5.7 per cent in 2024–25, as part of broader efforts to rein in borrowing and improve public finances.