Kenya is negotiating fresh budget support and other loans with the World Bank and the African Development Bank, with the money expected to land before the end of the current financial year in June 2027, Central Bank of Kenya Governor Kamau Thugge said on Friday.
Speaking in an interview on the sidelines of the IMF and World Bank annual meetings in Bangkok, Thugge said the talks include a possible World Bank Development Policy Operation and that officials are exploring “quite a number of sources” of external finance.
“They are looking at all kinds of financing… there’s quite a number of sources that they are trying to access,” Thugge said. “Between now and June of next year is when that external financing will be expected.”
Debt-for-food swap and emergency cash
A debt-for-food swap is among the options under review, he said, without giving further detail because he is not directly handling those talks. Reuters reported last month that Kenya is also in line for about $400 million in World Bank emergency financing to cushion risks including a regional Ebola outbreak and El Niño-related disruption.
An IMF team is due in Nairobi in December for a regular Article IV consultation, and a new Fund programme could form part of those discussions. Thugge said IMF money is not built into the government’s current financing plan, but would help if it arrives.
“It’s cheaper than the alternative financing, especially domestic financing. It’s concessional… and two, it also reduces the government’s recourse to domestic borrowing, and maybe that can also help banks lend to the private sector a bit more,” he said.
Treasury Cabinet Secretary John Mbadi was also in Bangkok this week for bilateral talks, following earlier signals that an Article IV mission was lined up for December, as we reported when Mbadi met US Treasury officials.
Growth outlook and inflation watch
Thugge expects Kenya’s economy to grow 5 percent this year and 5.3 percent next year, above the IMF’s 4.5 percent and 4.7 percent forecasts, citing agriculture, industry and services. He said there is still “enough time” to watch consumer prices, the Middle East conflict and the weather before the next rate decision.
The central bank last week held its benchmark lending rate at 8.75 percent for a fourth meeting in a row. That stance faces a fresh test after EPRA raised pump prices from October 15 and MPs extended the 8 percent fuel VAT relief for another 90 days.
“Definitely risks are tilted (to the upside),” Thugge said, adding that weaker food prices could still offset some of the fuel shock. Higher bond yields in advanced markets, he said, can also weigh on the shilling and feed into inflation indirectly.
Separately, development lenders continue to back Kenyan banks’ trade finance lines, including recent AfDB facilities with Family Bank, as businesses hunt for cheaper letters of credit and import cover.
