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Kenya Fails to Meet IMF Program Obligations
March 19, 2025
Kenya’s failure to meet its obligations under a $3.6bn IMF funding program has now led to the IMF withholding a final $850mn disbursement. The government was supposed to curb spending and boost tax collection but struggled to implement these measures, especially after protests against proposed new taxes last year. As a result, Kenya secured a $1.5bn loan from the UAE, but this loan could increase state borrowing and expose the country to foreign-exchange risks. The government also renegotiated a eurobond, extending its maturity to manage high-cost syndicated loans. The termination of the IMF program saw Kenya’s dollar bonds trend lower, and analysts believe that any new funding deal could affect the country’s financial stability. Despite this, Kenya’s President has arranged a power-sharing deal with rival Raila Odinga to help pass budget measures through parliament and strengthen re-election prospects in 2027.
Kenya’s dollar bonds have traded lower this week, but saw a slight recovery yesterday – its 6.3% 2034s are trading at 79.57 cents on the dollar, yielding 9.96%.
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