Misaligned Financing and Corruption are Barriers to Breaking the Debt Trap.

Kenya’s Debt Crisis

Misaligned Financing and Corruption are Barriers to Breaking the Debt Trap

FEBRUARY 2025

In the summer of 2024, thousands of Kenyans took to the streets as part of a protest movement against proposed policies to implement double-digit tax hikes on everyday items such as bread and cooking oil and slash critical public services. The policies were introduced to meet fiscal targets in Kenya’s loan agreements with the International Monetary Fund (IMF). These measures came at a time when inflation was already rising in the East African country, with youth unemployment reaching 67 percent and poverty rates hovering close to 40 percent.

The following brief summarizes Kenya’s debt crisis, the role of weak governance and corruption, and several top reforms needed to assure the accountable use of financing moving forward.

A DEBT CRISIS

The Kenyan government has accrued an alarmingly large and unsustainable amount of debt. Estimates place the total at over $80 billion—more than double the state budget of 2023. Approximately 60% of the nation’s tax revenues and almost 50% of its budget are allocated to servicing its debt, far outpacing funding for any other single line item such as health, education and other vital services.

Kenya is currently undergoing three separate IMF financing programs. This places the total number of IMF arrangements over the years at 22, suggesting more of a debt trap than pathway to a sustainable economy.

While the current IMF programs are slated to end in early-to-mid 2025, it is likely that the Kenyan government will request a program extension or negotiate a new agreement.

Read the full: Kenya-IMF-Brief.pdf (34 downloads )