Kenya, IMF Set for Key Talks in Washington Over New Funding Deal

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Kenya, IMF Set for Key Talks in Washington Over New Funding Deal

Kenya is set to sit for crucial talks with the International Monetary Fund (IMF) in Washington, D.C. next week as it seeks to get a new financing programme to support its economic recovery and budget needs.

Central Bank of Kenya (CBK) Governor Kamau Thugge announced on Tuesday, October 8, that a team of senior Treasury officials will join the discussions. He is optimistic the talks will yield a good outcome for the country.

“We will continue next week and of course we hope to agree on our programme as soon as possible,” said Governor Thugge during a press briefing in Nairobi.

Sources from the government say the new programme Kenya is seeking will have a lending component, after the government suspended new taxes this year after the withdrawal of the 2024 Budget.

For the 2025/2026 financial year, the government plans to borrow Ksh901 billion, with about Ksh287.4 billion expected from foreign sources to plug the budget gap.

Kenya’s previous Ksh464.9 billion IMF programme ended earlier this year. The country opted to forgo the last Ksh109.9 billion after failing to meet some fiscal targets including deficit reduction and revenue collection targets.

The talks are expected to pave way for a new deal that will help Kenya manage its external debt and stabilise its finances. Negotiations between Nairobi and IMF will continue for the next two months.

Economists say the government is seeking a more flexible programme with achievable conditions to avoid loan default.

The Washington talks follow an IMF team visit to Nairobi in September led by Haimanot Teferra, the lender’s Mission Chief for Kenya. The team met with Treasury officials and assessed the country’s fiscal and economic policies.

“At the request of the Kenyan authorities, an IMF staff team will start initial discussions in the coming days on a possible Fund-supported programme. We look forward to productive engagement with the authorities and other stakeholders during our visit to Nairobi,” Teferra said in a statement dated September 24.The team also assessed Kenya’s debt sustainability and anti-corruption framework, areas IMF has insisted must be addressed before new money is released. This is the second IMF team in five months to visit Kenya, after a similar assessment in June that looked at Kenya’s institutions for fighting corruption.

As the talks head to Washington, the government is under pressure to get a deal that balances fiscal discipline with economic growth and social stability.

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Kenya, IMF Set for Key Talks in Washington Over New Funding Deal