IMF Explains Why Ruto Will Continue Borrowing Loans Despite Rising Kenya's Debt

The International Monetary Fund (IMF) has highlighted why African countries continue to depend on loans, even as their debt levels rise.

According to the lender, two main factors are driving the trend: heavy debt burdens and the lack of cheaper alternatives for financing.

In a statement, the IMF said many African governments are facing persistent economic shocks, forcing them to return to global lenders for support. 

Since 2020, the IMF has already issued nearly $69 billion (about Ksh8.9 trillion) to countries across the continent and expects more demand in the coming years.
Rising Debt Burden

Data from the United Nations shows Africa’s total external debt now exceeds $650 billion (Ksh83.9 trillion). The cost of servicing this debt reached almost $90 billion (Ksh11.6 trillion) in 2024. 

Kenya is one of the most affected countries, with its public debt standing at about Ksh11 trillion. Of this, Ksh5 trillion is borrowed locally, while Ksh5.09 trillion is owed to foreign creditors, including bilateral and multilateral lenders.

Kenya’s debt-to-GDP ratio is estimated at 63 percent, surpassing the 55 percent limit recommended for stable economies.

Experts warn this could worsen the country’s fiscal position and lead to higher borrowing costs as investors seek larger risk premiums.

The IMF’s warning comes as Kenya enters discussions for a new loan programme. The government recently dropped the final $850 million (Ksh109.9 billion) tranche from its previous $3.6 billion (Ksh465 billion) programme after failing to meet key conditions such as reducing the budget deficit and increasing tax revenues.

To bridge the gap, Nairobi has looked at alternative options including diaspora bonds, privatising state-owned enterprises, and refinancing both local and external loans.

However, Treasury officials insist IMF backing is still crucial to prevent default and stabilise public finances.

Analysts believe negotiations with the IMF could be lengthy, with any new agreement likely to come after the 2027 General Election.

They predict the lender may demand that Kenya repays part of its outstanding loans before releasing additional funds.