Kenya has once again opened talks with the International Monetary Fund as pressure on public finances continues to grow. The move comes after the collapse of the previous IMF programme in 2025, which ended before completion due to failure to meet most of the agreed targets.
This renewed engagement shows that the government is facing serious challenges in managing its budget deficit, debt repayments, and overall fiscal stability.
Treasury officials have confirmed that an IMF delegation is already in Nairobi to discuss a new multi-year financing arrangement. Unlike the earlier programme under the Extended Fund Facility and Extended Credit Facility, the new deal will be structured around current economic conditions.
The government and the IMF agreed to end the old programme before its final review, which meant Kenya lost access to about Ksh110 billion that had been expected as part of the agreement.
Out of 16 performance targets, Kenya managed to meet only five, exposing weaknesses in revenue collection, spending control, and reform implementation.
The new programme is expected to run for about three years and will focus on stabilizing public finances and supporting medium-term economic planning.
Treasury Principal Secretary Chris Kiptoo explained that the decision to start afresh was mutual and aimed at creating a more realistic framework for cooperation.
However, the return to the IMF has raised concerns about whether the government can truly carry out the reforms it promises this time.
Kenya’s heavy debt burden remains the main driver behind this decision. A large share of government revenue is now used to repay loans, leaving less money for development projects and essential services.
Recently, the Treasury raised Ksh290 billion through a Eurobond to refinance older bonds that are due in 2028 and 2032.
While this move helps reduce immediate pressure, it does not solve the deeper problem of spending more than the country earns.
The government has announced plans to privatize some state-owned enterprises in order to raise funds. This shows how urgently the Treasury is searching for ways to increase cash flow and reduce its dependence on expensive borrowing.
Officials say these steps are meant to improve liquidity and give the country more room to manage its obligations.
Economic indicators suggest that the country is still growing. The economy expanded by about 5 percent in 2025, and growth is projected to rise slightly in 2026.
Agriculture has improved, the services sector remains steady, and money sent home by Kenyans abroad continues to support foreign exchange reserves.
The Nairobi Securities Exchange has also performed strongly, with the main index rising sharply compared to the previous year.
Despite these positive signs, fiscal pressure remains intense. Debt servicing continues to take up a large part of government spending, making it difficult to invest in health, education, and infrastructure.
