Kenya is now facing serious financial uncertainty after skipping the final review of its current program with the International Monetary Fund (IMF).
This decision means the country will miss out on about Ksh104 billion that was expected from the IMF, which is usually a key signal for other international lenders. Without this endorsement, Kenya could struggle to secure additional funding, creating a ripple effect that may complicate government plans and development projects.
The decision has raised concerns about how the country will bridge the financial gap as it moves forward.
Kenyan Time has shared that ratings agency S&P has already pointed out the risk of delays in securing around Ksh104 billion from the World Bank and Ksh193 billion from the UAE.
These funds were expected in the first half of 2025, but with the IMF review skipped, lenders might hesitate or set tougher conditions before releasing the money.
Kenya’s financial situation is already strained, and any delay in funding could make it even harder for the government to meet its budgetary needs.
Public services, salaries, and development projects all depend on these funds, and without them, the government could be forced to make difficult financial decisions.
Even with these challenges, Kenya has built up foreign exchange reserves of about Ksh1.3 trillion. While this provides some breathing room, relying too much on reserves can be costly.
The government may have to turn to expensive borrowing options, such as issuing bonds with higher interest rates.
This would add to the country’s debt burden, something that has been a growing concern. If international lenders view Kenya as a higher-risk borrower due to skipping the IMF review, the cost of borrowing could increase even further, making it harder to manage future loans.
Finance Minister John Mbadi has said the government has already applied for a new IMF program. However, securing funds from the World Bank will require meeting additional conditions, including the passage of a conflict of interest bill that the government is currently finalizing.
This adds another layer of uncertainty because if the bill is delayed or fails to meet the required standards, Kenya could face further setbacks in getting the funds.
The government will have to work quickly to ensure it meets these conditions, or it risks deeper financial trouble.
For President William Ruto’s administration, the pressure is mounting.
With the risk of delayed funding and growing debt concerns, the government might have to look for alternative financing options. Domestic borrowing is one possibility, but it could push up interest rates, making loans more expensive for businesses and individuals.
Another option is negotiating bilateral loans with countries that are willing to lend outside the IMF framework, but such deals often come with hidden costs and political compromises.
Kenya’s economic stability now depends on how well the government handles this situation. If the funding delays continue, the impact could be felt in all sectors, from infrastructure to social services.
The next few months will be crucial in determining whether the government can find a solution or if the country will be forced into more financial strain.
