Kenya begins talks with the IMF for a new loan program as its current deal expires in April, aiming to manage debt and sustain economic stability.
By Charles Wachira
Finance Minister John Mbadi announced on February 5, 2025, that Kenya has initiated discussions with the International Monetary Fund (IMF) to establish a new lending program. The current arrangement expires in April.
The East African nation is seeking continued support from the Washington, D.C.-based lender to maintain economic stability amid escalating debt-servicing costs, which have surged due to extensive borrowing over the past decade. In the fiscal year ending June 2024, Kenya’s debt-service costs consumed 59% of the nation’s tax income, the highest proportion over a decade.
The government’s previous attempt to increase revenue through tax hikes was abandoned last year following widespread protests that resulted in fatalities. This move underscores the delicate balance the administration must maintain between implementing fiscal reforms and addressing public dissent.
Finance Minister Mbadi emphasised the necessity of continued IMF support to navigate these economic challenges. “Securing a new program with the IMF is crucial for Kenya to manage its debt obligations and sustain economic growth,” he stated.
The outcome of these negotiations will significantly impact Kenya’s fiscal policies and economic trajectory, influencing resource allocation and development strategies within the East African region.