Kenya is at a delicate crossroads with the International Monetary Fund (IMF) as negotiations for a new lending program reach an apparent stalemate. The sticking point, as disclosed by Finance Minister John Mbadi, centers on how debt is classified—specifically whether securitized loans should be treated as sovereign debt when funding infrastructure projects.
Kenya’s talks with the IMF over a new lending program are at a standstill, centered on how to classify debt. Finance Minister John Mbadi said the IMF wants securitized, infrastructure-backed loans recorded as sovereign debt, which Nairobi objects to.
Key takeaways
Debt classification dispute: The core issue is how certain loans are recorded, impacting the perceived debt stock and future obligations.
No timeline yet: Mbadi noted ongoing talks but did not provide a date to resume negotiations.
Why it matters: Kenya’s previous IMF deal ($3.6 billion) expired in April. A new program would offer financial support and policy guidance amid a tight fiscal environment.
Funding plans: Kenya is Eyeing a $1.3 billion bond issue later this month to support the budget and investments, while IMF talks continue.
Recent debt management moves: Kenya reprofiled a $5 billion Chinese loan used for a railway project, reducing interest costs.
Debt snapshot (end-March): External debt was about \40.5 billion, with roughly \14.4B to the World Bank, $7.52B to eurobond holders, and nearly $5.04B to China.
What to watch
Official comments from Kenya’s finance ministry and the IMF on debt classification and any new program outline.
Terms and timing of the planned bond issue.
Updates on Kenya’s quarterly debt data and broader debt sustainability trends.