Gov’t to fund 2025/2026 financial year budget without IMF support

As the government prepares to unveil its expenditure plan for the financial year 2025/2026, the Treasury will be forced to find alternative sources of funding for the Ksh.4.2 trillion budget without the support of the International Monetary Fund (IMF).

This follows the ending of the Kenya IMF program earlier this month. Although Kenya has opened negotiations with the IMF, Treasury Cabinet Secretary John Mbadi noted that in the coming financial year, the National Treasury has not factored in any support from the IMF. 

Kenya’s move to abandon the 9th review of the IMF program saw the country miss out on a Ksh.109.4 billion disbursement, equivalent to $850 million. 

Out of this, Ksh.13.9 billion was set to go towards balance of payment stabilization, while the rest was expected to be channeled towards budget support.

This is according to CS Mbadi, who said that following a mutual agreement based on time constraints and revenue mobilization, which wasn’t coming to fruition, the government and the IMF opted to abandon the 9th review and instead opt for a new program altogether.

"The good news is that this is a program that we will negotiate. The other one was negotiated by the previous government. Now this one we will negotiate, and we will negotiate within the confines of what is happening in the global economy and also back at home. So, in a nutshell, I foresee good deliberations going forward," Mbadi pointed out.

The CS, however, remains optimistic that in the next program, Kenya will receive higher disbursement from the institution following a quota review by the IMF board.

Nonetheless, he remained mum on the possible amounts that Kenya will be seeking from the institution.

"IMF we have also been repaying, so that opens up some space. We had a facility exception access last year which we didn’t exploit because the markets opened, and we went to the market to manage our liabilities. That is also available," the CS stated. 

"Again, I want to repeat, the IMF's main objective is not to give loans; we have other institutions that are supposed to give us loans, like the World Bank, AFDB, OPEC. We are going the bond route and exploiting that route."

Mbadi has also ruled out the possibility of debt restructuring, arguing that any kind of debt restructuring could be detrimental to the economy.