Kenya Secures $1.4 Billion IMF Loan to Stabilize Economy

The International Monetary Fund (IMF) has approved a 38-month, $1.4 billion Extended Fund Facility (EFF) for Kenya, aimed at restoring macroeconomic stability and supporting structural reforms. Announced in June 2024, the program requires fiscal consolidation, including a freeze on new public sector hires and stricter control of county expenditures. Finance Cabinet Secretary John Mbadi said the funds would ease pressure on foreign reserves and support the shilling. In return, Kenya committed to reducing public debt from 71% to 65% of GDP by 2027. The IMF praised recent tax reforms but urged faster progress on parastatal restructuring and digital ID implementation. Critics warn austerity could hurt social spending, but the Treasury insists health and education budgets will be protected. The first disbursement of $400 million is expected in July. The deal follows months of negotiations and replaces the expired $2.3 billion precautionary arrangement.