However, the World Bank said 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 multilateral lender said it was in talks with the IMF in what is known as the Article IV consultation on the health of the Kenyan economy.

The IMF recently shared a draft of its governance diagnostic assessment with Kenya, designed to ⁠flag governance weaknesses and corruption vulnerabilities.

Feedback from the government and the Article IV consultations are expected to untangle negotiations for a new fund-supported programme.

The World Bank, which approved the disbursement of a Sh97 billion ($750 million) loan to Kenya yesterday, says the presence of an IMF fund is crucial at a time when the country’s economic outlook is facing considerable risks.

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,” said the World Bank 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 instil discipline in spending and revenue mobilisation beyond financial support.

Kenya has not included any new funding from the IMF in the budget for the year starting today, escaping tough lending conditions attached to the fund’s support, including higher taxes, job freezes and spending cuts.

This has seen 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 added.

Kenya’s IMF-supported programme lapsed in March 2025, and Kenyan authorities remain in discussions on a potential successor arrangement.

The IMF had approved a Sh310.8 billion ($2.4 billion) Extended Credit Facility and Extended Fund Facility (ECF/EFF) programme and a further Sh71.4 billion ($551.4 million) Resilience and Sustainability Fund (RSF) over 48 months starting in February 2021.

Eight reviews were completed in the period to March 2025, with cumulative disbursements standing at Sh404 billion ($3.12 billion) for the ECF/EFF and Sh23.3 billion ($180.4 million) for the RSF.

In March 2025, the programme lapsed on a mutual agreement as the IMF cited breaches, leaving roughly Sh110 billion ($850 million) undisbursed.

Kenya has deepened its reliance on the World Bank, forecasting to tap loans worth Sh170.5 billion for every fiscal year over the next four budget cycles from Sh129.8 billion in the current period.

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.

World Bank loans, which tend to be long-term, often carry less stringent conditions when compared to IMF aid, which is short- to medium-term and tackles immediate economic instability.