A staff team from the International Monetary Fund is due in Kenya this week to hold discussions on a new lending programme, the government said, as the East African nation seeks to secure fresh financial backing following the expiry of its previous agreement.
The IMF delegation is scheduled to visit from February 24 to March 4 to continue negotiations on a successor arrangement that would support key policy reforms and potentially unlock new funding, according to a government statement contained in a Eurobond prospectus released late Tuesday.
Kenya is seeking a new programme after the lapse in April of a US$3.6 billion IMF facility. Since then, officials from both sides have held a series of meetings in Nairobi and Washington aimed at shaping a follow-up deal.
“The talks are intended to ensure that any new programme aligns with Kenya’s fiscal and economic priorities while supporting macroeconomic stability,” the government said in the prospectus.
The new engagement comes as Nairobi looks to reinforce investor confidence amid elevated debt-servicing costs and tight fiscal conditions.
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The Washington-based lender did not immediately respond to a request for comment.
Earlier this month, Finance Minister John Mbadi said the government had formally requested a new IMF arrangement, though it has not incorporated IMF disbursements into its budget projections for the current fiscal year or the next one beginning in July.
Mbadi said the government was nonetheless keen to reach an agreement to anchor reforms and reassure markets, particularly as Kenya continues to tap international capital markets.
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Last week, the government issued a $2.25 billion Eurobond, part of broader efforts to manage refinancing risks and plug budget gaps. The prospectus accompanying the issuance outlined the planned IMF visit and ongoing discussions.
Kenya, East Africa’s largest economy, has in recent years faced mounting pressure from high debt-servicing obligations, a weakening currency and rising public expectations for economic relief.
To raise funds for infrastructure and development projects, the government has turned to securitisation of selected revenue streams. That strategy, however, initially complicated negotiations with the IMF, which typically emphasises transparency, debt sustainability and prudent fiscal management in programme design.
Analysts say a new IMF programme could provide both direct financing and a policy anchor, helping Kenya maintain access to external funding at more favourable rates.
The previous IMF-supported programme focused on fiscal consolidation, governance reforms and measures to strengthen monetary policy credibility. It also aimed to stabilise debt dynamics after years of heavy borrowing for infrastructure projects.
Kenya’s public debt has risen sharply over the past decade, driven in part by large-scale transport and energy investments. While officials argue that these projects will boost long-term growth, critics have warned that debt-servicing costs are crowding out social and development spending.
The government has pledged to narrow the fiscal deficit through revenue-enhancing measures and expenditure controls, while protecting vulnerable households from economic shocks.
An agreement with the IMF could serve as a signal to investors that Kenya remains committed to reform, even as it navigates political and economic headwinds.
The outcome of the talks over the coming days will be closely watched by markets, as Nairobi balances the need for external support with domestic priorities and public scrutiny over austerity measures.
For now, both sides appear to be laying the groundwork for a fresh partnership aimed at restoring stability and sustaining growth in one of sub-Saharan Africa’s key economies.
