IMF Set to Hold Talks in Nairobi Over New Funding Deal

Kenya is in discussions with the International Monetary Fund (IMF) over a possible new funding programme as the government seeks additional financing to support its budget and economic plans.

Central Bank of Kenya (CBK) Governor Kamau Thugge confirmed on Wednesday that talks between Kenya and the IMF are ongoing, with the possibility of another Fund-supported programme being considered.

Speaking during a post-Monetary Policy Committee briefing in Nairobi, Thugge said the two sides were continuing discussions aimed at reaching an agreement.

He also revealed that an IMF team is expected to travel to Nairobi soon to begin Article IV consultations. The consultations normally involve an assessment of a country's economic performance, policies and financial outlook.

According to Thugge, the upcoming discussions will also provide an opportunity for Kenya and the IMF to further discuss their relationship and the possibility of securing another funding arrangement.

The amount Kenya could receive under a new programme has not yet been disclosed. The discussions come at a time when the government is planning to increase borrowing to finance its expenditure and bridge the budget deficit.

Treasury's draft Budget and Economic Outlook Paper estimates that Kenya will borrow Ksh1.321 trillion during the 2027/28 financial year.

The government expects about Ksh1.1 trillion of the planned borrowing to come from domestic sources, while approximately Ksh236 billion is projected to be raised from external lenders.

The borrowing plan is part of a proposed Ksh5.323 trillion national budget, highlighting the government's continued need for additional financing.

Kenya's relationship with the IMF has faced challenges in recent months after negotiations for a new programme slowed amid concerns over governance and corruption.

In April, the IMF said further discussions could not progress until the Kenyan government responded to a draft report examining governance and corruption issues that had been presented to President William Ruto's administration.

The IMF has also stressed that any future financial programme would require Kenya to demonstrate a credible strategy for reducing budget deficits, improving governance and maintaining economic stability.