Kenya’s economic stability is under threat following its decision to skip the final review of a multi-billion-shilling programme with the International Monetary Fund (IMF). This move held back the disbursement of nearly KSh 104 billion, and has triggered alarm among international partners especially the World Bank which now warns that the country could face financial difficulties without renewed IMF engagement.
The IMF programme was initiated in 2021 under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) which was designed to help Kenya make important changes and manage its spending and borrowing better. However, in March 2025, Kenya chose not to proceed with the programme’s final review. This decision may directly affect Kenya’s funding for development projects.
Analysts have warned that the IMF acts as a seal of approval for other financiers and without it, Kenya risks losing access to crucial World Bank and donor funds. Indeed, the World Bank is now withholding about $800 million in expected disbursements, while a separate $1.5 billion deal with the United Arab Emirates also hangs in the balance.
Kenya’s Finance Ministry says the World Bank will give funds if local reforms are made, not based on what the IMF says. But others argue that without a clear economic plan, things remain uncertain. In its latest economic update, the World Bank acknowledged Kenya’s modest macroeconomic gains such as lower inflation, a more stable currency, and slightly improved foreign exchange reserves. However, it pointed some weaknesses such as public debt remains high, consuming nearly a third of tax revenues and Revenue collection remains weak.
Due to public protests over new taxes, the government has come up with a simpler 2025/26 budget that focuses on collecting taxes better and cutting spending, aiming to reduce the money gap. However, without support from the IMF, many are unsure if these steps will be enough to win back investor trust. Kenya has now asked the IMF for a new deal that fits its current economic and political situation. To get delayed World Bank funds, Kenya also needs to pass key laws like the Conflict-of-Interest Bill (proposed law meant to prevent government officials or public servants from using their positions for personal gain). The country must now act fast to make needed changes, avoid upsetting the public, and prove to lenders that it can manage its finances well.
also Read: IMF Approves Kenya’s $236 Million Loan as Country Meets Lender’s Targets
