Written by Kelly Were
President William Ruto’s administration has excluded the International Monetary Fund (IMF) from its funding sources in the proposed KSh 4.3 trillion national budget for the financial year 2025/26, marking a significant shift in Kenya’s external financing strategy.
According to data from the National Treasury’s Budget Summary and Supporting Information, the government has zero plans to borrow from the IMF for the fiscal period between 2025/26 and 2028/29. This follows a mutual agreement between Kenya and the IMF to terminate the ninth review of the programme first entered into in April 2021.
Instead, the Ruto administration is placing its external funding bets on:
- KSh 170.5 billion annually from the World Bank, up from KSh 129.8 billion disbursed in the current year,
- KSh 21.3 billion per year from the African Development Bank (AfDB), slightly down from KSh 29.5 billion in the current period.
Why Kenya is Ditching the IMF
Economist Churchill Ogutu, noted that Kenya’s pivot away from the IMF stems from the strict conditions attached to IMF funding, including:
- Increased taxation
- Restructuring of state-owned enterprises
- A tighter squeeze on the budget deficit
“These were the exact conditions the government chose to sidestep in the Finance Bill 2025,” Ogutu pointed out. In contrast, World Bank funding conditions are seen as more targeted and manageable, such as the requirement to pass the Conflict of Interest Bill 2025, which President Ruto recently returned to Parliament for amendments to comply with World Bank expectations.
While the World Bank’s Development Policy Operations (DPOs) are viewed as less aggressive than IMF mandates, they still require structural adjustments and governance reforms.
“This isn’t a free ride,” said Ogutu. “Even with the World Bank, there’s an expectation of reform, especially around governance, transparency, and anti-corruption.”
The shift underscores Kenya’s attempt to balance fiscal discipline with political feasibility, as widespread taxation and state restructuring have proven unpopular among citizens and lawmakers alike.
