Kenya and the International Monetary Fund (IMF) have agreed to start formal talks on a new lending program, abandoning the ninth review of the current $3.6 billion loan.
This decision comes as Kenya struggles with rising debt-servicing costs, which have surged due to a borrowing spree over the past decade.
The current program, which began in April 2021, is set to expire next month. However, its implementation has been hindered by anti-tax hike protests and a dispute over new borrowing from the United Arab Emirates.
Finance Minister John Mbadi announced last month that the government would seek a new financing program.
Under the current lending program, the IMF has approved $3.12 billion for disbursement as of October last year.
Kenya’s government has been scrambling to secure new sources of financing, including boosting revenue collection, to keep up with growing expenditure needs and astronomical debt servicing costs.
Kenya’s total debt-to-GDP ratio stood at 65.7% as of June last year, exceeding the 55% sustainable threshold.
The IMF has received a formal request for a new program from the Kenyan government, and talks are expected to begin soon.
