Kenya has told the International Monetary Fund it does not need its money — at least not before the financial year closes in June. Buoyed by billions of shillings flowing in from asset sales and bond markets, Treasury officials say the country has plenty of room to fund its budget without submitting to the fund’s trademark demands for higher taxes, wage freezes and spending cuts.
A Privatisation Windfall That Changes the Calculus
The Treasury’s confidence rests on a confluence of asset-sale proceeds and debt market activity that has injected an estimated Sh588.5 billion into government coffers — roughly five times what the IMF would typically disburse to Kenya in a single fiscal year.
The single largest contributor is the sale of a 15 percent stake in Safaricom to South Africa’s Vodacom, a transaction valued at Sh244.5 billion. Add to that Sh106.3 billion raised through the Kenya Pipeline Company (KPC) initial public offering, in which the government sold a 65 percent stake to the public while retaining a 35 percent holding, and the state has already unlocked substantial new resources from the domestic capital markets.
The third pillar is a dual Eurobond issuance totalling Sh290.3 billion ($2.25 billion). After using Sh53.5 billion ($415.35 million) to buy back existing external debt, Kenya is left with a net Sh236.7 billion ($1.83 billion) available for budget support.
“I want Kenyans to understand that the IMF’s primary responsibility is not to fund budgets of member countries — it is for balance of payments support. Going forward, we are trying to minimise our focus on the IMF.”
— Treasury CS John Mbadi
The Painful Legacy of IMF Conditions
The desire to avoid Fund conditions is not abstract. Kenya’s previous IMF programme, inked in April 2021, ended prematurely after the country failed to satisfy 11 agreed benchmarks. Among them were the restructuring of national carrier Kenya Airways (KQ) and a review of billions of shillings collected through fuel levies that had been securitised to fund infrastructure spending.
That early exit was costly. Kenya missed out on approximately Sh110 billion ($850.9 million) that would have flowed from the programme’s ninth and final review. The episode left a lasting imprint on how Nairobi weighs the trade-off between cheap multilateral money and the policy constraints that come with it.
The IMF team that departed Kenya noted the talks had covered the need to strengthen fiscal discipline, enhance fiscal credibility and build resilience against external shocks — including potential spillovers from instability in the Middle East. Mission chief Haimanot Teferra said engagement would continue at the IMF-World Bank Group Spring Meetings in April, keeping the door open without committing to a new formal arrangement.
World Bank Steps In as Anchor Lender
With the IMF receding from Kenya’s near-term financing picture, the World Bank is expected to remain the primary source of concessional credit over the medium term, supplemented by smaller tranches from the African Development Bank (AfDB). Both institutions have expanded their footprint in Kenya since the pandemic, gaining influence over fiscal and governance policy as the government sought to plug budget gaps without returning to expensive commercial markets.
Kenya is also leaning increasingly on securitisation — pledging future revenue streams such as the fuel development levy against upfront financing for infrastructure and development projects. The approach initially complicated IMF negotiations, but the Treasury appears prepared to accept that trade-off if it means preserving policy space and avoiding conditions that would require fresh pain for ordinary Kenyans.
Analysts, however, caution that the IMF still matters even when its cheques are not being cashed. David Rogovic, Vice-President and Senior Credit Officer for Sovereign Risk at Moody’s Ratings, has argued that the fund’s real value to Kenya is as a credibility signal to private investors rather than a direct source of finance.
“It’s really the signalling, whether you have a funded programme or not. The IMF brings credibility and is an external anchor,” Mr Rogovic said. “The IMF can catalyse concessional financing, but ultimately it comes down to delivering the fiscal adjustment. The government needs to deliver on the fiscal plan to maintain positive investor sentiment and low market spreads.”
For now, the Ruto administration appears to believe it can deliver that reassurance through results rather than a formal Fund arrangement — banking on the Sh588.5 billion windfall to demonstrate that Kenya’s finances are in capable hands, conditions not required.
