Kenya's government has announced plans to return to the International Monetary Fund (IMF) for fresh financing to address the budget deficit, while pursuing privatisation of state-owned enterprises. An IMF team arrived in Nairobi to start negotiations on a new three-year arrangement. This follows the collapse of the previous Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programmes in March 2025.
Treasury Principal Secretary Chris Kiptoo revealed the plans during an appearance before the National Assembly’s Departmental Committee on Finance and National Planning to present the 2026 Budget Policy Statement. He clarified that the discussions would focus on an entirely new programme rather than a continuation of the previous one.
“We had a programme with the IMF which ended last year. We agreed with the IMF not to proceed with the ninth and last review,” Kiptoo told lawmakers.
The IMF delegation is in the country for two weeks of consultations. The proposed arrangement is expected to run for about three years and will emphasise medium-term financing and fiscal stability. The previous four-year programme worth Ksh464.47 billion (USD3.6 billion) was set to continue until April 2025 but was terminated after Kenya failed to meet 11 out of 16 performance targets, resulting in the loss of about Ksh110 billion (USD850.9 million) in funding.
Despite seeking IMF support, the government is not pursuing additional costly commercial debt, instead focusing on debt consolidation and adherence to the legal debt ceiling. Last week, it raised Ksh290 billion from international markets via a Eurobond sale to refinance bonds maturing in 2028 and 2032.
Treasury Cabinet Secretary John Mbadi stated that the funds were mobilised through a bond sale in international markets as part of efforts to smooth Kenya’s debt repayment profile.
On the economic outlook, Kiptoo noted that Kenya’s economy grew by an estimated 5.0 per cent in 2025 and is projected to expand by 5.3 per cent in 2026, supported by better agricultural productivity, steady services sector growth, and increased diaspora remittances. Foreign exchange reserves reached Ksh1.561 trillion (USD12.1 billion) by December 2025, covering 5.2 months of imports, up from Ksh1.303 trillion (USD10.1 billion) in 2024. The NSE 20 Share Index rose 52.4 per cent in January 2026 compared to the previous year.
The government will prioritise reforms such as enhanced domestic revenue mobilisation, expenditure rationalisation, digitisation of public finance systems, full implementation of e-procurement, transition to accrual accounting, rollout of the Treasury Single Account, and expanded public-private partnerships.
