NAIROBI – Discussions between Kenya and the International Monetary Fund (IMF) for a new funding programme have been delayed, with no clear timeline for a resolution, Streamline News has established. The delay stems from significant disagreements over the country's currency management and debt sustainability strategy, according to official statements and sources close to the negotiations.

An IMF staff team, led by mission chief Haimanot Teferra, concluded a visit to Nairobi on Wednesday, October 9, 2025, after two weeks of initial talks with officials from the National Treasury and the Central Bank of Kenya (CBK). While the IMF described the engagement as making progress, it stopped short of announcing a staff-level agreement, which is a precursor to the release of funds. Follow-up discussions were held during the IMF and World Bank Annual Meetings in Washington D.C. between October 13 and October 18, 2025.

Currency Stability a Major Sticking Point

A primary point of contention is the IMF's concern over the stability of the Kenyan shilling. The Fund has reportedly questioned whether the currency's lack of volatility is interfering with monetary policy transmission and inflation targeting. According to Kenya Revenue Authority (KRA) Chairman Ndiritu Muriithi, who spoke on Friday, October 24, 2025, the IMF believes the exchange rate is "too stable". Muriithi publicly criticized this assessment, suggesting the global lender's models do not always align with the economic realities of developing nations.

For most of 2025, the shilling has remained steady, trading in a narrow band of approximately Ksh 129 to the US dollar. The CBK maintains this stability is supported by adequate foreign exchange reserves, which stood at USD 12.08 billion (providing 5.3 months of import cover) as of Thursday, October 23, 2025, alongside strong diaspora remittances.

Debt Management and Fiscal Credibility Under Scrutiny

Alongside currency policy, the IMF is pressing for enhanced fiscal discipline. In a statement released on Friday, October 10, 2025, the Fund emphasized that policy priorities for a new programme include measures to "enhance fiscal policy credibility, ensure sustainability of public finances and debt, and minimise fiscal, financial, and external sector risks". The lender is also advocating for greater transparency in debt management and governance reforms within the public sector.

These demands come as Kenya's public debt continues to grow. According to Central Bank of Kenya data, the total public debt stood at Sh11.8 trillion as of June 2025. While a recent Debt Sustainability Analysis described the debt as sustainable, it also noted a high risk of debt distress. In response, the National Treasury has formulated the 2025 Medium-Term Debt Management Strategy, which aims to reduce the debt-to-GDP ratio from 63.7% in 2024 to 57.8% by 2028 by focusing on concessional and domestic borrowing.

Implications of the Delay

The negotiations are for a successor programme after Kenya's previous $3.6 billion, four-year arrangement with the IMF expired prematurely earlier in 2025. That deal was cancelled by the government in March 2025, which led to the forfeiture of an undisbursed tranche of approximately Ksh 110 billion ($850 million) after certain reform criteria were not met.

Securing a new IMF deal is considered critical for Kenya to anchor its external debt repayments and support its budget, particularly as access to international capital markets remains expensive. CBK Governor Kamau Thugge confirmed on Wednesday, October 8, 2025, that Kenya hopes to reach an agreement on a new funded programme "as soon as possible".

However, the IMF Director for the African Department, Abebe Aemro Selassie, has confirmed that while discussions are continuing, there is currently no timeline for a breakthrough. The delay leaves the government in a precarious financial position, awaiting a resolution on policy disagreements that are fundamental to Kenya's economic strategy.