Nairobi: Kenya is set to hold a new round of meetings with the International Monetary Fund (IMF) as the government seeks to establish a fresh support programme to stabilize its economy and manage growing debt obligations. The talks come at a time when Nairobi is exploring alternative funding mechanisms such as revenue securitization, which the IMF remains cautious to classify outside the conventional debt framework.
Finance Minister John Mbadi confirmed that Kenya and IMF officials will soon begin detailed follow-up sessions aimed at shaping the structure of a new programme. The government hopes to convince the global lender to recognize securitized revenue instruments where future income streams are pledged for current financing as an alternative form of funding rather than additional public debt.
“The government views the securitization model as a creative way to unlock development resources without deepening our debt burden,” Mbadi stated, adding that discussions with IMF officials have been “constructive but ongoing.”
However, the IMF reportedly maintains that securitization still constitutes a form of borrowing that adds to Kenya’s debt profile. The disagreement highlights a broader tension between the need for developmental financing and global financial standards on debt sustainability.
Kenya’s previous IMF Extended Fund Facility and Extended Credit Facility, valued at around $3.6 billion, expired earlier this year. That programme, launched in 2021, was intended to restore fiscal balance, improve governance in state-owned enterprises, and enhance transparency in public finances. With its conclusion, Kenya is now under pressure to secure a follow-up arrangement to sustain economic reforms and reassure investors about its fiscal discipline.
Analysts note that the end of the IMF programme coincides with rising debt service costs, a weakening currency, and strained foreign exchange reserves. The country’s debt-to-GDP ratio has hovered around 70%, placing Kenya among Africa’s most indebted economies.
The government’s new financial strategy involves raising funds by pledging future revenue from infrastructure assets such as ports, toll roads, and energy projects. This securitization approach aims to attract investors without immediately swelling the national debt. Yet, critics argue that such instruments merely disguise debt under different labels, postponing repayment risks to future administrations.
Economic experts warn that while securitization can inject short-term liquidity, it also limits future revenue flexibility. “Once a government pledges future income, it loses a portion of fiscal independence,” said a Nairobi-based economist. “It’s like spending tomorrow’s taxes today.”
The IMF’s concern lies in ensuring that Kenya’s public borrowing remains transparent and sustainable. The Fund is expected to seek detailed data on the country’s debt stock, contingent liabilities, and the terms of the securitized instruments before approving any new programme.
Officials familiar with the talks said that the IMF wants to avoid setting a precedent that could encourage other countries to bypass debt classification norms. “The challenge is balancing innovation in public finance with the need for accountability and prudence,” one IMF source noted.
For Kenya, securing a new IMF deal is more than a fiscal formality it’s a signal of credibility to global markets. The IMF’s endorsement often serves as a confidence anchor for international creditors and credit rating agencies. Without such support, Kenya risks facing higher borrowing costs and currency volatility.
Additionally, a new IMF programme is expected to include policy commitments on fiscal consolidation, tax reforms, and public sector restructuring. These measures, while stabilizing the economy, may also bring political challenges as austerity steps tend to impact public spending and household incomes.
As Kenya continues to pursue its ambitious infrastructure agenda spanning transport corridors, renewable energy, and digital projects the government must balance development needs with fiscal sustainability. The upcoming meetings with the IMF are expected to define not only the contours of Kenya’s next financial assistance package but also its broader economic direction for the coming decade.
The outcome of these discussions will determine whether Kenya can secure the flexibility it seeks or whether the IMF will insist on traditional lending terms tied to debt transparency and reform conditions. Either way, the talks mark a pivotal moment in the country’s ongoing struggle to sustain growth without succumbing to the mounting weight of public debt.