IMF and World Bank Freeze Loan Disbursements to Kenya Over Failed Reforms
Kenya’s funding from the International Monetary Fund (IMF) and World Bank has been put on hold after the government failed to meet key conditions tied to multi-billion shilling loan agreements, raising concerns over the country’s fiscal stability.
The IMF, which acted as a lender of last resort during the global economic shutdown caused by the COVID-19 pandemic in 2020, had previously provided crucial support to stabilise Kenya’s economy. Through periodic disbursements under a multi-year programme, the fund helped the nation navigate fiscal pressures despite challenges in meeting agreed-upon reforms.
Similarly, the World Bank has supported Kenya through its Development Policy Operations (DPO), a financial mechanism designed to promote broad institutional and policy reforms. Both lenders had continued to provide assistance until 2025, but delays have now emerged amid Kenya’s failure to fulfil critical programme performance metrics.
IMF Denies $850 Million to Kenya
The IMF recently withheld $850.9 million (KSh 109.7 billion) in funding following the conclusion of a multi-year agreement signed in 2021. According to reports, Kenya failed to comply with key conditions, including the restructuring of Kenya Airways and the implementation of safeguards on funds from the fuel stabilisation fund, which were allegedly misappropriated.
Business Daily reported that the country fell short on 11 of 16 performance criteria, which included controlling public spending, increasing tax revenues, and paying suppliers on time.
“The understanding regarding the 9th EFF/ECF (Extended Fund Facility/Extended Credit Facility) is based on an assessment of performance under the programme and reasonable prospects for forward-looking commitments to help achieve the programme’s objectives before its expiration,” an IMF statement said.
World Bank Suspends $750 Million Loan
Meanwhile, the World Bank has suspended a $750 million (KSh 96.7 billion) loan to Kenya since June 2025, citing slow progress on reforms such as amendments to the Competition Act aimed at regulating dominant market players.
Although Kenya recently passed a conflict-of-interest bill restricting improper relationships between public officials and politicians—a move widely expected to unlock funding—the World Bank maintains that 11 other requirements remain outstanding. These include seven pieces of legislation and four policy reforms, such as improvements to the Treasury Single Account (TSA), e-government procurement, and faster approval processes for County Government Additional Allocations Bills.
A World Bank spokesperson said: “The Treasury Single Account (TSA), e-government procurement, and a framework for quicker approval of County Government Additional Allocations Bills are among the outstanding prior acts.”
Rising Public Debt Adds Pressure
Kenya’s debt levels have surged, with the National Treasury reporting that most borrowing between January and August 2025 was sourced domestically. According to Treasury Cabinet Secretary John Mbadi, public debt has now exceeded KSh 12 trillion following loans totalling over KSh 1.04 trillion in just eight months.
The delays in international funding, combined with rising domestic borrowing, have raised concerns among economists about Kenya’s fiscal sustainability and the government’s ability to deliver on its reform agenda.
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IMF and World Bank Freeze Loan Disbursements to Kenya Over Failed Reforms