Kenya is reshaping its negotiations with the International Monetary Fund (IMF) as talks for a new funding programme continue, following discussions that began with the Nairobi Mission in March during the Spring Meetings in Washington, D.C.
The Central Bank of Kenya (CBK) Governor Kamau Thugge said the country is no longer just seeking emergency support after the collapse of the $3.6 billion programme in March 2025.
He noted that Kenya is now negotiating for funding that could replace expensive domestic debt with cheaper concessional loans.
Central Bank Governor said that over the past two years, the institution has built up Kenya’s foreign exchange reserves to a fairly strong level, adding that the country does not currently face a traditional balance of payments need that would require funding support.
“I think for us, the Central Bank, over the last two years, we have been able to build our reserves to a fairly sizable level and for that reason, we don’t really have a balance of payments need in the classical meaning of the word, at least in terms of fund support,” CBK governor said.
“From that perspective, the support from the IMF and World Bank really would be about the concessional loans, concessional financing. It would replace expensive domestic borrowing and therefore improve even the debt vulnerabilities and just reduce the cost of interest.”
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According to Thugge, Kenya currently has about 5.8 months of import cover, indicating a strong foreign exchange buffer.
He added that this position is expected to improve further once proceeds from the Safaricom privatization, estimated at about $1.9 billion, are received.
Once the funds are disbursed, import cover could rise to around seven months, further strengthening the country’s external reserves.
IMF Demands Fiscal Discipline for New Programme
The talks come as IMF indicates that its current approach to supporting economies is focused on re-phasing access under existing programmes, rather than creating new blanket arrangements for distressed countries.
According to IMF outgoing Country Director, Abebe Aemro Selassie the Fund is seeking a “credible path towards fiscal consolidation” before advancing discussions on a new programme for Kenya.
He noted that the IMF is prioritising interventions through existing lending frameworks.
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Meanwhile, CBK Governor said Kenya is still engaging the Monetary Fund on the Article IV consultation, whose mission has been delayed due to parallel talks on a new IMF programme.
He added that discussions on the timing are ongoing, and an agreement on the Article IV mission timeline is expected to be reached “quite shortly.”
