Kenya requested a new ⁠IMF programme after its previous $3.6 billion deal ended in April last year on the back of failure to meet agreed conditions, prompting the Treasury to omit loans from the fund in the national budgets to 2029.

CBK Governor Kamau Thugge said an IMF staff team was expected ‘shortly’ in Nairobi to initiate Article IV consultations—a surveillance tool that allows the fund to monitor the economic and financial policies.

“We expect an IMF team to visit Nairobi shortly, initiating the Article IV consultation discussions,” Dr Thugge said on Wednesday.

“In the context of those consultations, we will have further discussions about our relations going forward and in particular on having a fund-supported programme.”

The World Bank reckons that the benefit of the IMF programme to Kenya goes beyond loans, arguing that policing from the fund and its reforms agenda are critical for the country.

The IMF tends to set the toughest engagement terms of the two multilateral lenders, including reforms on State corporations, spending cuts and increased revenues, signalling new taxes, an aggressive pursuit of tax evaders and cheats and roping in of traders and workers in the informal sector.

The World Bank, on its part, has relatively softer terms, mostly requiring support for socioeconomic outcomes like climate change mitigation, placing competition curbs on firms, and the integration of minority groups like refugees.

The multilateral lender in June said it would play mediator in efforts to close ranks between the IMF and Kenya over the Article IV consultations.

Kenya last year postponed the consultations, which allow the IMF to assess a country’s economic health and evaluate financial risks.

“At the request of the Kenyan authorities to prioritise discussions on their programme request, the 2025 Article IV consultation was rescheduled for a later date,” the IMF said in September last year.

A dedicated team of IMF economists visits a member country annually to gather economic data and hold discussions with government and central bank officials.

Following the visit, the staff prepares a comprehensive country report, which triggers conditions attached to soft loans from the fund.

Kenya has lacked IMF support since March 2025, when the fund terminated a standing arrangement, denying the country Sh110 billion ($850 million) in financing. Fresh discussions have been protracted.

“Delays in reaching a new IMF programme could weaken the credibility of the fiscal framework,” the World Bank said in a report accompanying its fresh disbursement.

“The World Bank and IMF continue to work closely to coordinate policy dialogue, analysis, and technical assistance,” added the multilateral lender in a report that gave the IMF funding hitch prominence.

The push for a new arrangement with the IMF is seen as more important from a reform perspective, where the fund would instill discipline in spending and revenue mobilisation beyond financial support.

Kenya did not include any new funding from the IMF in the budget for the year starting July 1 as it looked to escape tough lending conditions attached to the fund’s support, including higher taxes, job freezes and spending cuts.

This saw Kenya approach fresh IMF talks with caution after the termination of the earlier loan facility due to breached conditions.

The World Bank sees risks to Kenya’s macroeconomic outlook, including a prolonged conflict in the Middle East, which could further raise fuel and fertiliser import costs and dampen diaspora remittances.

The August 2027 General Election is expected to increase political risks and dim fiscal consolidation efforts.

“Should financing conditions tighten or refinancing costs rise, private sector credit would be crowded out, investor confidence could weaken, and the anticipated recovery in domestic demand could lose momentum,” the World Bank said.

The IMF had dished out painful conditions in the wake of its surging loans post Covid-19 pandemic, including the need to increase tax revenues, cut budget deficits, and restructure State-owned enterprises.

Kenya has turned more towards the World Bank for budget support in the absence of new IMF funding, where it faces less stringent conditions.

In June, the World Bank approved the disbursement of a Sh97 billion ($750 million) loan to Kenya after the country overcame hurdles that stalled the loan package throughout 2025.