Kenya Undecided on Need to Enter New IMF Deal as Economic Pressures Mount

By Esther Murigi

The Kenyan government remains undecided on whether to pursue a new financing arrangement with the International Monetary Fund (IMF) after the current Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs expire in early 2026.

The uncertainty underscores the delicate balance between stabilizing public finances and managing growing discontent over some measures tied to previous IMF-supported programs.

According to senior Treasury officials, discussions within the National Treasury and the Central Bank of Kenya (CBK) are ongoing to assess the country’s medium-term financing needs.

Kenya’s current IMF program, approved in 2021 and worth approximately $2.34 billion, aimed to help the country manage the economic fallout from the COVID-19 pandemic, strengthen fiscal discipline, and reduce debt.

Since then, the IMF has disbursed over $2 billion following regular program reviews, while insisting on reforms such as cutting the fiscal deficit, restructuring state-owned enterprises, and improving tax collection.

However, these reforms have brought  widespread public criticism, particularly after the government’s decision to raise taxes and remove fuel subsidies earlier this year.

The measures, seen by many as IMF-inspired, contributed to a sharp increase in the cost of living and changed nationwide protests in mid-2025.

President William Ruto, who once defended the IMF-backed reforms as necessary for restoring fiscal stability, has in recent weeks softened his take.

Ruto  Speaking at a public forum in Nakuru last week, he noted that Kenya would not mortgage its policy independence and hinted that future cooperation with international lenders would depend on conditions that safeguard the welfare of citizens.

Economic analysts are divided on the issue. Some argue that a new IMF program is essential to maintain investor confidence and secure favourable funding and fiscal pressures.

Kenya faces external debt repayments exceeding $4.5 billion in 2026, including a $2 billion Eurobond maturing in June of that year.

Without additional external financing, the government may struggle to meet the request without utilizing an expensive commercial borrowing.

Faith Njoroge an economist of University of Nairobi said that an IMF arrangement serves as a policy anchor and reassures markets that Kenya remains committed to reform.

Others, however, caution that continued IMF involvement may constrain Kenya’s economic flexibility. Critics argue that IMF conditions often prioritize fiscal tightening over growth and social welfare.

John Githingo, a governance expert, said that Kenya needs a growth-driven strategy, not another round of economic. He also added that we should focus on expanding the tax base, fighting corruption, and improving productivity.

The IMF, for its part, has maintained that it does not dictate specific policies but supports homegrown reform plans designed by governments themselves.

In a statement following its last review mission to Nairobi in September, the Fund praised Kenya’s steady progress in fiscal consolidation but warned that risks remain elevated due to financial uncertainty and climate-related shocks.

As 2026 approaches, Kenya’s policymakers must weigh the benefits of continued IMF engagement against the political and social costs.

With inflation floating around 7.8 percent, a depreciating shilling, and public debt nearing 69 percent of GDP, the decision carries far-reaching implications for economic stability and public trust.

For now, Treasury officials say all options remain on the table and they  are evaluating the next steps carefully.

Whatever the outcome, Kenya’s approach to the IMF in the coming months will signal its broader strategy for navigating an increasingly complex economic.

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The Author is Esther Murigi certified Broadcast Journalist