Kenya has formally requested a new lending program from the International Monetary Fund (IMF) after both sides agreed to abandon the latest review of the country’s current $3.6 billion loan arrangement.
The decision, announced at the end of an IMF mission visit to Nairobi, comes as the East African nation struggles with mounting debt servicing costs following years of heavy government borrowing.
“The IMF has received a formal request for a new program from the Kenyan authorities and will engage with them going forward,” said Haimanot Teferra, the IMF’s mission chief for Kenya.
The ninth review of the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) will not proceed, meaning Kenya will not receive a final disbursement of about $480 million under the existing program, which is set to expire next month.
The news sent Kenya’s dollar bonds tumbling, with 2048 maturities falling more than 1 cent each to trade just above 80 cents—some of their lowest levels in six months.
Debt Pressures and Market Reactions
The Kenyan government has been scrambling to secure new funding sources amid a growing debt burden. The country’s total debt-to-GDP ratio stood at 65.7% as of June last year—well above the 55% threshold considered sustainable.
Charlie Robertson, head of macro-strategy at FIM Partners, noted that up to $800 million in IMF-linked financing could now be in jeopardy. However, he said the market still sees a potential path forward.
“A funded IMF deal would be the best-case outcome,” Robertson said, pointing to Kenya’s recent $1.5 billion Eurobond issuance and a separate $1.5 billion loan from the United Arab Emirates as key stabilizing factors.
The IMF did not specify whether Kenya’s new request was for a lending or non-lending program, but Finance Minister John Mbadi told Reuters last month that the government was seeking financial support.
A Broader Trend in Africa
Kenya joins a growing number of African nations turning to international markets to restructure their debt. Countries like Ivory Coast and Angola have also carried out liability management exercises to smooth out payments and protect key expenditures such as healthcare and climate adaptation.
With the IMF discussions now shifting toward a fresh deal, Kenya faces a crucial test in its efforts to regain economic stability while maintaining investor confidence.
