Kenya is seeking a new loan programme from the International Monetary Fund (IMF) after both sides agreed to abandon the ninth review of the earlier one taken in 2021.
In a statement sent to media houses today, the IMF said it has received a formal request for a new programme from the Kenyan authorities and will engage with them going forward.
According to the IMF's mission chief, Haimanot Teferra, the two sides had "reached an understanding that the ninth review under the current Extended Fund Facility and Extended Credit Facility programmes will not proceed."
However, the $3.6 billion (Sh465 billion) lending programme came with a set of rules that have seen the country increase taxes, making life unbearable for many to cut on lending to fund the budget.
Under the current lending programme, a total of $3.12 billion (Sh403 billion) had been approved for disbursement by the end of last October, meaning that the ninth review could have unlocked a final disbursement of about $480 million (Sh62.03 billion).
The high debt situation still lingers even as the four-year fiscal correction loan from IMF ends.
According to the latest weekly bulletin published by the Central Bank of Kenya, the country's total public debt stands at Sh10.92 trillion.
The new debt financing is likely to come even in tougher conditions that will likely heighten the tax regime, further pushing up the overall cost of living.
This is coming just three months as the Parliament fix bolts on the 2025/26 budget expected to be presented to the National Assembly by the National Treasury boss.
Although the National Treasury is yet to speak on the matter, President William Ruto has often defended the government’s plan to levy additional taxes on Kenyans, stating that it is part of a broader strategy to enhance the country’s revenue and reduce reliance on borrowing.
Mid-last year, Ruto said that he intends to raise the country’s average tax rate from the current 14 per cent to 16 per cent by the end and aims for a rate of between 20 and 22 per cent by the end of his term.
While acknowledging the economic burden Kenyans will have to bear to achieve this target, Ruto believes that the long-term benefits will justify the increased taxes.
