Kenya is set to miss out on KSh63.4 billion ($490 million) in new funding from the International Monetary Fund (IMF) due to the early termination of a multi-year program initially scheduled to conclude in April 2025. This decision comes as Kenya and the IMF have mutually agreed to forgo the ninth review of the Extended Credit Facility (ECF) and Extended Fund Facility (EFF), effectively ending the program ahead of its planned completion.
Since the program’s inception in April 2021, Kenya has accessed KSh404 billion ($3.12 billion) out of a potential KSh467.5 billion ($3.61 billion), leaving an undisbursed balance of approximately KSh63.4 billion ($490 million). The IMF, in a statement, noted: “The Kenyan authorities and IMF staff have reached an understanding that the ninth review under the current Extended Fund Facility and Extended Credit Facility programs will not proceed.” The statement further mentioned that Kenya has formally requested a new program, with discussions set to continue.
The specific reasons for the program’s early termination were not detailed in the IMF’s announcement. However, Kenyan authorities had previously indicated intentions to transition the remaining funds into a new arrangement. The Treasury’s 2025 Budget Policy Statement, for instance, revised expected IMF disbursements under the ECF/EFF programs to KSh50.2 billion from an earlier projection of KSh138.2 billion, anticipating the program’s conclusion without additional funding. Albert Mwenda, Treasury’s Director General for Budget, Fiscal, and Economic Affairs, stated, “We are discussing with the Fund the possibility of a new program that can sustain reforms we have been undertaking under the current program. If we agree with the Fund, we may roll over the balance of the funding to the new program.”
Despite the termination of the ECF/EFF programs, Kenya retains access to funding under the Resilience and Sustainability Fund, a climate-linked initiative separate from the concluded facilities. To date, Kenya has received KSh23.3 billion ($180.4 million) from this fund, out of a potential KSh70.1 billion ($541.3 million).
The early conclusion of the IMF program has prompted adjustments in Kenya’s fiscal strategy. The National Treasury has reduced its net foreign financing target for the fiscal year ending June 2025 to KSh280.1 billion from KSh355.5 billion. To compensate for the shortfall in external funding, the government plans to increase domestic borrowing, raising the target to KSh582.7 billion from the previous KSh413.1 billion. Consequently, the anticipated fiscal deficit at the end of the financial year has risen to 4.9% of GDP, up from the initial 4.3%.
As Kenya embarks on negotiations for a new program with the IMF, the nature and structure of this prospective arrangement remain under consideration. The country’s commitment to sustaining ongoing reforms and addressing fiscal challenges will be pivotal in shaping the contours of any future engagement with the IMF.
Kenya anticipates further IMF funding by year-end
