Ever since the Covid-19 pandemic, the World Bank and the International Monetary Fund (IMF) have made loan disbursements to Kenya in almost unison, totaling hundreds of billions of shillings.
However, that has not been the case in 2025.
When economies around the world shut down in 2020, the IMF quickly stepped in as a lender of last resort, providing key financing to stabilise countries such as Kenya.
It has since made periodic disbursements without skipping a beat even as Kenya struggled to fulfill key conditions set in the arrangement.
The World Bank has also supported Kenya over the same period through its development policy operations (DPO) --a financing tool supporting a country’s broad policy and institutional reforms.
Both multilateral lenders left their taps open until 2025, a year that has seen a freeze in funding from the pair as Kenya’s failure to keep up with key programme performance indicators stacks up.
The IMF was the first to drop the bomb in March as it terminated a multi-year deal reached in 2021, denying Kenya Sh109.7 billion ($850.9 million) in funding.
This was after Kenya failed to honour conditions agreed upon, including the restructuring of Kenya Airways (KQ) and lack of restrictions to the use of cash from the fuel stabilisation fund which was diverted to other uses.
In total, the country failed to meet 11 of 16 conditions including placing curbs on spending, bolstering tax collection and settlement of suppliers’ dues.
“The understanding regarding the 9th EFF/ECF (extended fund facility/extended credit facility) is based on an assessment of performance under the programme and reasonable prospects for forward looking commitments to help achieve the programme’s objectives prior to its expiration,” the IMF stated at the termination of the programme.
The World Bank has since June 2025 frozen a Sh96.7 billion ($750 million) loan as Kenya struggles with reforms including amendments to the Competition Act to strengthen regulations that control the operations of firms with dominance in the market.
While Kenya has passed a conflict-of-interest Bill which curbs conflict of interest involving politicians and public officials, a move that was widely expected to unlock funding, the World Bank says Kenya is yet to meet 11 other conditions which include seven laws and four policy reforms.
“Outstanding prior actions include further implementation of the Treasury Single Account (TSA) and e-government procurement, and a framework for faster approval of County Government Additional Allocations Bills,” a World Bank spokesperson told the Business Daily in November.
“(Other prior actions include) regulations to the Conflict-of-Interest Act, regulations to the Social Protection Act, regulations to the County Licensing (Uniform Procedures Law), amendments to the Competition Act, updated Kenya Information and Communication Regulations, the urban transport policy, amendments to the Forest Conservation and Management Act and the sovereign sustainability-linked financing framework.”
Without a single dollar disbursed from the IMF and the World Bank in 2025, Kenya is now working to unlock facilities from both lenders but has set the DPO facility as the higher priority.
Kenya is engaged in discussions with the World Bank to not only have approval for the credit facilities but also hasten their disbursement even as the National Treasury remains silent on Kenya’s ability to clear the 11 hurdles in time.
“We still expect about $750 million from the World Bank from DPO 7 and we are still concluding discussions on the targets to be met. The bank was talking about March, but we have told them we need the money earlier, so we are trying to fast track the funding,” Treasury Cabinet Secretary John Mbadi said.
The country is also in discussions with the IMF for a new funded programme with the conversations expected to continue in January 2026 when the fund’s mission team visits.
But even before the discussions continue, Kenya is already bickering with the IMF over various macroeconomic policies that could derail new funding further.
The fund expressed concerns in October over the unchanged value of the Kenya shilling against the dollar despite global shifts that were expected to result in a stronger currency.
The local unit continues to trade in a narrow range of between Sh128.90 and Sh130 even after weakening significantly against other major currencies like the euro and the British pound.
The IMF has not commented specifically on its discourse on the shilling but has noted that its observations are guided by its oversight role on the international monetary system where it undertakes surveillance on exchange rate policies.
The IMF also wants debt secured using securitised revenues such as the road maintenance levy fund (RMLF) to be classified as sovereign debt, but Kenya has differed insisting the debt is secured under a distinct entity --a special purpose vehicle (SPV).
Kenyan authorities have bickered on whether Kenya still requires a funded programme from the IMF with those against the plan reportedly viewing a programme from the fund as a drag to the country’s economic ambitions.
“Do we need an IMF programme? I don’t think we have a meeting of minds internally on why we need it, but that’s because of uncertainties on shocks,” said David Ndii --the chairperson of the Presidential Council of Economic Advisors.
“In the long-haul, our goal is to transition from a lower-middle-income to an upper-middle-income country. Part of that means being more market-facing than seeking multilateral financing.”
The IMF has had its way in pushing some reforms outside the programme including the recent currency swap on the Standard Gauge Railway (SGR) from dollars to yuan.
Analysts see the need of a new IMF programme as one beyond financing with a successor arrangement being noted as a crucial step in ascertaining the credibility of fiscal, monetary and governance reforms.
The National Treasury has maintained that IMF support must not only be seen as financial even as it pushes for a funded programme into 2026.
“We did not factor any proceeds from the IMF for the 2025/26 financial year. If it comes, it will come as a windfall,” said John Mbadi.
“IMF’s responsibility is not to give countries loans but to stabilise economies where there are shocks. We should avoid taking loans from the fund and it should only be there for peer review.”
