The Treasury omitted funding from the International Monetary Fund (IMF) in the national budgets to 2029 following uncertainty over whether fresh talks could unlock multi-billion shilling loans.
Kenya has not included any new funding from the IMF in the budget for the year starting July as it looks to escape tough lending conditions attached to the fund’s support, including higher taxes, job freezes and spending cuts.
This has seen the country approach fresh IMF talks with caution after the termination in March of Kenya’s loan facility over breached conditions, which saw the country miss out on debt worth Sh110 billion.
Treasury Cabinet Secretary John Mbadi says the decision to omit IMF funding for next four financial years was informed by the need to avoid overstating expected financing while maintaining that Kenya maintains cordial relations with the fund.
“We are being very cautious because before you get into an arrangement with the IMF, you can’t start assuming that you will get funding. But it doesn’t mean that we are terminating our programme with the IMF,” the CS said in an interview with the Business Daily.
“We have to continue with the IMF programme even if it is not funded. At present, we are pursuing a funded programme, but it may not yield much going into the future because we have almost exhausted our quota.”
Kenya’s cumulative access to resources from the IMF is capped at six times its quota of 3.2 billion SDRs (special drawing rights) or Sh582.9 billion ($4.5 billion).
The country’s outstanding purchases and loans to the IMF stood at Sh518.1 billion ($4 billion) as of March 31, 2025.
This implies that Kenya can only tap a maximum of Sh64.8 billion under normal access limits.
This comes in a period when Kenya will deepen its reliance on the World Bank, forecasting to tap loans worth Sh170.5 billion for every fiscal year over the next four budget cycles from Sh129.8 billion in the current period.
The IMF had dished painful conditions in the wake of its surging loans post Covid-19 pandemic, including the need to increase tax revenues, cut budget deficits and restructure State-owned enterprises.
World Bank loans, which tend to be long-term, often carry less stringent conditions when compared to the IMF debts, which are short- to medium-term and tackle immediate economic instability.
The lack of IMF loans in the budget coincided with a budget proposal that has not imposed new major taxes or increased existing ones, after deadly protests broke out last year against the government's measures to raise revenue.
More than 50 people were killed when the youth-led protests broke out last June, forcing President William Ruto to abandon tax hikes worth Sh346 billion, and causing a delay to funding from the IMF—which had pushed for higher revenues.
“I want Kenyans to understand that IMF’s primary responsibility is not to fund the budgets of member countries and is instead for balance of payments support,” Mr Mbadi said.
“Going forward, we are trying to minimise our focus on the IMF but it doesn’t mean that we are stopping our engagements.”
Fresh budget documents from the Treasury, submitted to the National Assembly last week, show that Kenya expects to remain in the Word Bank’s development policy operations (DPO) until at least the end of the 2028/29 financial year.
For each of the fiscal cycles, Kenya expects to receive a total of Sh682 billion in equal parts, beginning with Sh170.5 billion in the year starting July 1.
