The Kenyan government has officially requested a new lending arrangement from the International Monetary Fund (IMF), incorporating unused funds from the existing program, following the mutual decision to conclude the ninth and final review ahead of schedule.
Finance Minister John Mbadi announced on March 24 that the decision to halt the review process was primarily due to time constraints, dismissing speculation of a fallout between Nairobi and the IMF. The current financial arrangement, which was set to expire in April 2025, consists of a $3.6 billion Extended Credit Facility (ECF) and Extended Fund Facility (EFF), with approximately $800 million still unutilized.
Despite reports that Kenya had missed certain financial targets required under the program, Mbadi assured that the IMF had determined Kenya’s economic fundamentals to be stronger than anticipated, particularly in terms of debt sustainability. He acknowledged that challenges remain in reducing the fiscal deficit and enhancing revenue collection, both key components of the IMF’s support conditions.
The finance minister further emphasized that the unused funds from the ninth review may be integrated into a newly structured program, with ongoing discussions between the Kenyan government and IMF officials. The IMF, while confirming that talks are in progress, has not yet disclosed specific details regarding the potential framework of the new arrangement.
Kenya previously struggled to meet fiscal targets during the seventh and eighth reviews; however, the IMF board approved the disbursement of funds related to those reviews last October. With continued IMF engagement, Kenyan authorities are optimistic that a fresh lending program will help address persistent fiscal challenges, stabilize the economy, and drive sustained economic growth.
