Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
What next for Kenya, IMF after terminated programme?
Treasury Cabinet Secretary John Mbadi responds to a question from members of the Bunge la Mwananchi and residents during a dialogue session at Swahilipot Hub on March 7, 2025.
Has Kenya cut ties with the International Monetary Fund (IMF)?
No. Kenya and the IMF have not cut ties but have instead reached a mutual understanding to terminate its current programme which was due to run until April 2025.
How much has Kenya lost by not completing the programme?
Kenya stood to receive an estimated Sh63.4 billion ($490 million) from the IMF in the ninth review of a multi-year programme reached in April 2021 which is represented by funding from two arrangements of the fund- the extended credit facility (ECF) and the extended fund facility (EFF).
Kenya was also in line to receive Sh46.6 billion ($360.9 million) representing undisbursed funding from the Rapid Support Facility- a climate linked programme that ran alongside the ECF/EFF facilities.
What comes next?
The IMF disclosed that it has received a formal request from Kenya for a new programme and will engage with the local authorities going forward.
On its part, Kenya through the Treasury has previously indicated the desire to remain close to the fund to access concessional financing and that it desires to unlock balances lost to the termination of the ECF/EFF and RFC programmes in a new programme.
Will Kenya get new funds from the IMF in the future?
The government has sought to rollover the balance of funds into a new programme ensuring the availability of financing from the IMF in the near term.
The National Treasury office for general budget, fiscal and economic affairs said they would hold discussions with the IMF over a new programme to sustain the progress of reforms reached in the terminated plan.
Why might Kenya get an unfunded programme?
Fiscal analysts see an un-funded programme with the IMF noting that Kenya has mostly overdrawn its share of resources from the fund.
Kenya’s cumulative access of resources from the IMF is capped at six times or 600 percent of its quota or an effective Sh556.3 billion ($4.3 billion).
The EFF/ECF programme would have drawn Sh467 billion ($3.61 billion) bringing Kenya’s cumulative access closer to the limits.
Kenya’s outstanding purchases and loans from the IMF stood at Sh495.5 billion ($3.83 billion) as of December 31, 2024, representing 89 percent of the country’s allowed total access.
The undisbursed funding from the aborted ninth review of the programme however ensures that Kenya still qualifies for resources from the IMF avoiding an un-funded programme.
Is Kenya and the IMF in a committed relationship?
Kenya and the IMF have both highlighted their commitment to one another with the former seeing the fund as a key source of cheap/concessional financing amid persistent fiscal deficit and budget pressures.
Following anti-Finance Bill protests in June last year, the IMF has emphasised its support for Kenya including reforms geared at ensuring prudent use of resources to lower debt vulnerabilities.
The IMF is currently spearheading a governance diagnostic programme with the aim of assessing macroeconomic and governance risks.
What’s Kenya’s history with the IMF?
Kenya has had access to financing from the IMF through its various facilities since 1975 including stand-by arrangements (SBAs) and standby credit facilities (SCFs) which would likely succeed the ECF/EFF arrangements.
Prior to the April 2021 programme Kenya had an SBA and SCF facility totalling Sh194 billion ($1.5 billion) at current exchange rates and which expired in March 2018.
Kenya did not tap from either facility, but the arrangements were seen as crucial in navigating unexpected external shocks to the economy.
To have access to the standby arrangements Kenya must not have a current balance of payments.
How will Kenya meet its external financing requirements without the IMF?
Kenya has a wide scope of external financing even without the IMF and retains access to concessional funds from the World Bank’s development policy operations (DPO).
Additionally, Kenya is close to unlocking a Sh194 billion ($1.5 billion) commercial loan arranged by the United Arab Emirates (UAE).
Kenya has also regained access to the international capital markets and has issued two new Eurobonds in the last two years, allowing it to undertake liability management operations on Eurobonds maturing in June 2024 and May 2027.
