President William Ruto has been dealt a huge budget blow after analysts revealed that a new loan from the International Monetary Fund (IMF) could arrive after the 2027 General Elections. While speaking to Bloomberg, the analysts noted that new reforms proposed by Kenya in seeking the new financing programme would result in prolonged talks and delay the disbursement of funds.
Further, the IMF may require the government to repay part of its existing debt before a substantive new financing programme can be considered, with an agreement unlikely to be reached before the elections.
The government is seeking a new loan to facilitate external debt payments, with talks set to begin between the two parties this month. President William Ruto and IMF Managing Director Kristalina Georgieva in France on June 22, 2023.
PCS Kenya had previously agreed on a four-year, $3.6 billion (Ksh465 billion) IMF programme that expired in April but missed out on a final disbursement of about $850 million (Ksh109.9 billion) after struggling to meet key targets, including reducing its budget deficit and increasing tax revenue. Any new programme is expected to align with the government's strategy and policy objectives, which are now centred on reduced borrowing and higher tax predictability. Ahead of the talks, reports revealed that Kenya requested a governance report from the IMF, and that reform proposals contained therein will likely feature in any agreed programme. "The first draft of this will be provided to the government at year-end," noted one analyst who was speaking to Bloomberg. "Programme discussions would most likely only really seriously commence in the second quarter of 2026 at the earliest." The analysts opined that they did not expect the new funded programme to be politically acceptable or credible, especially if it was concluded in the run-up to the elections, and warned that Kenya would struggle to stick to its borrowing quotas if an agreement is reached.
