Kenya, January 29 2026 – Kenya is set to resume negotiations with the International Monetary Fund (IMF) in February 2026, aiming to secure a new funding arrangement following the collapse of its previous programme in 2025.
The renewed engagement, confirmed by the National Treasury, signals a cautious but critical effort by Kenyan authorities to restore confidence with international lenders while grappling with fiscal pressures and debt sustainability concerns.
According to Raphael Owino, Director General of the Public Debt Management Office at the National Treasury, IMF staff are expected to return before the end of February to continue discussions that had originally been scheduled for January but were postponed to allow for additional internal consultations. “Before the end of next month, the IMF is likely to be back in the country to continue with the discussions,” Owino told Business Daily, underlining the priority attached to the talks.
Kenya’s previous IMF programme, a multi-year support arrangement approved in 2021, effectively collapsed in March 2025 after Nairobi failed to meet most of the agreed performance targets.
The Fund withheld about KSh 109.7 billion ($850.9 million) in financing after Kenya missed 11 of 16 conditions, including key fiscal and structural reform benchmarks.
These included delays in restructuring Kenya Airways, misappropriation of the fuel stabilisation fund, missed tax reforms, and failure to curb spending and clear supplier arrears.
The outcome meant that Kenya, which was in line to receive several hundred million dollars in disbursements, had to reorganise its financing plans. In the 2025/26 budget, the Treasury deliberately excluded anticipated IMF financing to manage public expectations, even as negotiations continued behind the scenes.
IMF staff last visited Kenya between September 25 and October 9, 2025, assessing the economy and engaging in early reform discussions while no new programme had been finalised.
Kenya’s decision to pursue new talks with the IMF comes amid heightened fiscal pressure. Public debt stood near KSh 12.25 trillion by late 2025, with the debt-to-GDP ratio hovering near the 67–68 per cent threshold where many debt sustainability frameworks become strained.
Heavy reliance on domestic borrowing to fund budget shortfalls, reportedly around KSh 3.5 billion per day according to critics, has raised concerns among analysts about crowding out private sector credit and long-term economic stability.
Economists say that securing a credible IMF-backed programme could help anchor fiscal and debt reforms, create predictable conditionality for policy adjustments, and boost investor confidence by showing international support for Kenya’s economic strategy.
A formal IMF programme typically comes with a policy framework that encourages fiscal discipline, revenue mobilisation, and structural reforms, steps seen as critical for long-term fiscal health.
Despite the push to reengage the IMF, Treasury Cabinet Secretary John Mbadi has publicly cautioned against rushing into another IMF loan arrangement.
In a December 2025 interview, Mbadi argued that countries with stable and growing economies should avoid IMF borrowing unless facing severe shocks, positioning Kenya as preferring the Fund in the role of external economic reviewer rather than a lender of last resort.