NAIROBI, Kenya- Kenya is in talks with the World Bank and African Development Bank (AfDB) for about Sh127 billion in additional financing as the government seeks to bridge a widening budget deficit amid delays in securing a new International Monetary Fund (IMF) programme.
The proposed financing comprises about Sh94 billion ($725 million) through a World Bank Development Policy Operation (DPO) and approximately Sh34 billion through an AfDB policy-based operation.
Treasury’s Public Debt Management Director General Raphael Owino said the two facilities are expected to be released before the end of the 2026/2027 financial year, subject to the required reforms and approval processes.
“Yes, certainly. We are working on a DPO of $725 million with the World Bank. We are already discussing the potential reforms for that. Once we agree on the list of reforms, we will move on,” Owino said.
“In addition to the DPO from the World Bank, we expect the policy-based operation from the African Development Bank. That’s also going to be a significant concession of financing,” he added.
World Bank Loan Tied To Reforms
The proposed World Bank financing is linked to policy and institutional reforms aimed at strengthening public financial management, governance and accountability.
The reform agenda includes measures on disclosure of public officials’ private interests, public-private partnership rules, whistleblower protection and amendments to the Public Finance Management Act.
The World Bank approved a separate $750 million DPO for Kenya in June 2026 to support reforms in governance, public financial management and social protection. The operation combined $340 million in International Bank for Reconstruction and Development financing with $410 million in concessional International Development Association financing.
The bank’s financing programme has continued to emphasise reforms intended to improve transparency and the management of public resources.
Budget Deficit Drives Search For Financing
The additional borrowing comes as Kenya faces mounting pressure on its public finances.
Treasury projections put the fiscal deficit at Sh1.288 trillion for the 2026/2027 financial year, with higher domestic debt interest payments and weaker-than-projected revenues contributing to the financing gap.
The African Development Bank has also identified constrained fiscal space and elevated debt-service obligations as major challenges facing Kenya’s development financing needs.
The AfDB approved a €293.88 million loan in July 2026 to support Kenya’s second phase of the Economic Inclusion and Green Recovery Support Programme, targeting economic governance, public-resource management, youth and women’s economic opportunities, small businesses and climate-resilient growth.
IMF Talks Remain Uncertain
The latest financing push comes after Kenya’s discussions with the IMF for a successor programme stalled following the conclusion of the previous arrangement.
Owino said a transition involving the IMF’s Kenya team had contributed to the delay in consultations.
“There was a transition of the IMF on the Kenyan team. So, they requested to be given a transitional period, which we gave them. Now we expect a new mission to come towards the end of November or early December,” he said.
The delay has increased the government’s focus on alternative sources of external financing as it works to meet its budgetary needs.
Kenya Explores Other Borrowing Options
Beyond the World Bank and AfDB facilities, the government is also pursuing other external financing options, including a planned debut panda bond in China and Samurai bonds in Japan.
The government is also continuing efforts to secure a new IMF programme, although the timing and terms of any potential agreement remain uncertain.
