By Andrew Kariuki
The International Monetary Fund (IMF) has directed Kenya to classify at least Ksh335 billion raised through future tax pledges as public debt, a move that could significantly impact the government’s infrastructure financing model and ongoing negotiations for a new IMF programme.
In a report published on its website, the IMF stated that Kenya has raised approximately USD2.6 billion (Ksh335 billion) by securitising future tax revenues to fund major infrastructure projects.
This means the government has been leveraging expected tax collections, such as levies and duties, as collateral to access funding upfront, without formally recording the obligations as part of the national debt.
However, the IMF has taken a firm position on the matter.
“Such income should be recognised as a debt liability under the international statistical standards,” the Fund stated.
The directive places several flagship projects under scrutiny, including the Talanta Stadium funded through the sports levy, road construction projects such as the Mau-Rironi dual carriageway financed via fuel taxes, the Standard Gauge Railway extension from Naivasha to Malaba backed by import duty, and planned upgrades at Jomo Kenyatta International Airport supported by passenger taxes.
The IMF further outlined how such financing should be treated going forward, leaving little room for alternative interpretation.
“Securitisation of future revenue should either be treated as a loan to the securitisation unit or as direct borrowing of the government,” the report noted.
This reclassification would push Kenya’s official debt levels higher, potentially tightening borrowing limits and exposing such financing arrangements to stricter oversight by both the IMF and global markets.
The position contrasts with earlier views by Treasury Cabinet Secretary John Mbadi, who has maintained that securitised revenues fall outside the government’s balance sheet and should not be classified as debt.
The development comes amid high-level talks between Kenya and the IMF held on April 13, 2026, in Washington, D.C., attended by IMF Managing Director Kristalina Georgieva and a Kenyan delegation that included Mbadi, Principal Secretary Chris Kiptoo, and Central Bank Governor Kamau Thugge.
The discussions focused on Kenya’s economic outlook, inflation, reform priorities, and the broader impact of global tensions, including the Middle East conflict, with the IMF pledging support to help cushion the country from external economic shocks.
The IMF’s latest directive now adds pressure on the government to adjust its fiscal reporting, potentially reshaping how Kenya finances its development agenda.
