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IMF to Study Kenya’s Debt Amid New Funding Discussions
May 13, 2025
Kenya’s discussions with the IMF for a new financial program have prompted the latter to undertake an in-depth debt sustainability analysis (DSA). This follows the March 2025 announcement that the IMF would discontinue their existing lending arrangement, followed by Kenya’s subsequent request for a fresh program. The prior IMF program, which included the EFF and Extended Credit Facility (ECF), had a total value of $3.6bn, with approximately $800mn remaining unused. Kenya’s need for continued IMF support arises from substantial debt-servicing costs. The IMF will have to finalize the DSA before a potential funding agreement, in order to assess Kenya’s repayment capacity. Kenya’s financial obligations are significant – for instance, Bloomberg notes that Kenya will require at least $26bn over the next decade to repay maturing offshore debt and to cover large annual interest payments. Analysts have pointed out potential complexities in reaching a renewed IMF agreement, citing concerns about Kenya’s borrowing limits and the challenges of ensuring fiscal discipline. Alongside the DSA, the IMF will also conduct an assessment of the impact of corruption on Kenya’s finances, scheduled to commence in June.
Kenya’s dollar bonds were trading stable with its 6.3% 2034s at 78.65, yielding 10.2%.
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