The International Monetary Fund (IMF) has raised concerns about Africa’s growing debt. The lender noted that high obligations and a lack of affordable financing options continue to push nations toward borrowing.
Since 2020, the IMF has provided nearly $69 billion (Ksh8.9 trillion) to African countries. Despite this, demand for support remains strong, driven by global shocks and debt pressures.
Rising African Debt Levels
According to United Nations data, Africa’s external debt has climbed to $650 billion (Ksh83.9 trillion). Servicing these loans cost almost $90 billion (Ksh11.6 trillion) in 2024 alone.
The IMF explained that nations are turning to new programs, extensions, and augmentations to stay afloat. This reliance reflects the difficulty of accessing cheaper loans elsewhere.
Kenya’s Search for Relief
Kenya is now seeking a fresh IMF loan program. The Treasury has started talks after dropping the final $850 million (Ksh109.9 billion) from its previous $3.6 billion (Ksh465 billion) deal.
The government failed to meet targets on reducing the budget deficit and raising tax revenue. This has forced Nairobi to consider other funding options, including diaspora bonds, privatization, and refinancing existing loans.
Mounting Debt Pressures
Kenya’s total public debt stands at Ksh11 trillion. About Ksh5 trillion is domestic, while Ksh5.09 trillion is external. The debt-to-GDP ratio now sits at 63 percent, well above the recommended 55 percent limit.
These levels increase risks for the economy. Foreign investors may demand higher interest rates to cushion against possible default.
Delays in IMF Talks
Analysts predict the new IMF deal may take time. Talks could stretch beyond the 2027 General Election, as the lender may require reforms and partial repayments first.
Such delays may hit President William Ruto’s budget plans hard. They could also limit Kenya’s ability to pay its external debts, worsening fiscal strain.
For now, IMF support remains crucial. It not only provides funding but also boosts investor confidence, unlocking other financing opportunities for the government.
