Nairobi, Kenya – Kenya has formally requested a new financial program from the International Monetary Fund (IMF), signaling a shift away from its current arrangement as the country grapples with mounting debt-servicing costs.
The IMF confirmed the request at the conclusion of a mission to Nairobi, stating that it will engage with Kenyan authorities on the next steps. As a result, the ninth review of the existing Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs—worth a combined $3.6 billion—will not proceed. The facility, which expires next month, has so far disbursed $3.12 billion, with the now-scrapped ninth review potentially unlocking an additional $480 million.
The announcement triggered a drop in Kenyan dollar bonds, with the 2032 and 2048 maturities falling by more than 1 cent each, reaching their lowest levels in six months.
Economic Struggles and Policy Shifts
Kenya’s economic strain follows years of heavy government spending, leading to an unsustainable debt load. The country is now seeking new sources of financing, including efforts to boost domestic revenue collection and secure alternative funding to cover critical expenditures such as climate change adaptation.
The nation’s total debt-to-GDP ratio stood at 65.7% as of June 2023, exceeding the 55% sustainability threshold. In response, Kenya recently joined other African nations, such as Ivory Coast and Angola, in conducting liability management exercises—a strategy aimed at restructuring debt repayments.
While details of the new IMF program remain unclear, Kenya’s decision to shift gears reflects a broader strategy to navigate its fiscal challenges while maintaining essential government services.