Kenya’s debt repayment burden has renewed questions about the impact of International Monetary Fund (IMF) lending conditions, particularly the tax increases and spending cuts governments adopt to keep up with loan repayments.

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The issue is under discussion at the IMF and World Bank Group annual meetings in Bangkok, Thailand, running from Monday, October 12, to Sunday, October 18, where finance officials are examining rising debt levels and the challenges developing countries face in financing their economies.

Kenya’s situation has drawn attention after its previous IMF programme stalled without the final review being completed in 2025, leaving the country without the remaining funding under the arrangement and without a replacement deal in place.

Debt justice expert Iolanda Fresnillo said Kenya had sought to manage its debt burden through public spending cuts and attempts to raise more taxes, measures that sparked protests, particularly among young people.

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“Countries are already cutting their expenditures because their debt payments are going high and because of the IMF conditionality,” Fresnillo, who works on debt justice for Eurodad, told Reuters .

Kenya faces a major debt repayment hurdle, with Ksh1.7 trillion in public debt due before June 2027, representing 12.7 per cent of the country’s Ksh13.2 trillion debt stock, according to Business Daily .

The amount includes Ksh1.06 trillion in principal repayments, leaving the Treasury with the task of raising enough money to settle maturing loans or borrowing to replace them.

Given the developments, replacing old loans with new ones could increase the cost of borrowing if interest rates are higher when the Treasury returns to the market, adding to the amount the government spends on servicing debt.

The repayment pressure also limits the funds available for other needs, including healthcare, education and infrastructure, while attempts to raise more revenue through taxes risk further public opposition and spending cuts could affect the delivery of public services, according to experts.

The IMF has signalled a possible shift towards lending programmes that require fewer reforms but demand deeper changes in the areas covered by their conditions.

📰 Source: Kenyans.co.ke