Kenya Seeks Another IMF Loan After Losing Out on Ksh110 Billion

President William Ruto’s administration is keen on re-negotiating its engagement terms with the International Monetary Fund (IMF) in the wake of extreme tariffs his US counterpart issued against Kenya as well as last year’s anti-tax protests.

‍Why This Matters: The renegotiation, which is expected to kick off soon, comes shortly after the administration ended a 4-year agreement with the fund valued at Ksh466 billion ($3.6 billion), forgoing Ksh110 billion ($850 million) in the process. The deal was called off last month.

In an interview with Bloomberg in London on Wednesday, Prime Cabinet Secretary Musalia Mudavadi noted that the administration is keen on evading a repeat of the anti-Finance Bill 2024 protests which forced the Head of State to reconstitute his Cabinet and shelve the bill in its entirety.

To do this, Mudavadi noted that the government will be cognisant of the state of the economy when developing policies to ensure that taxpayers are cushioned from high taxes.

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“Some of the targets were extremely steep. If you are unrealistic with some of your projections, you end up exerting a lot of pressure on your economy and your people,” the CS told the press.

“We would want a program that is realistic, maybe another three-year program,”  he added noting, “We have to come to terms and discuss these new realities as we negotiate the new program. We would have to be very realistic based on the numbers that we have as a country to be able to project and show the kind of revenue targets that we want to work with going forward.”

Last year, Kenyans, especially Gen Zs and Millenials, scuttled President Ruto’s efforts to shore up the government’s revenue to finance his budget by taking to the streets and forcing Parliament to adopt the 2023 Finance Bill estimating the budget at Ksh3.6 billion. The Head of State had introduced a slew of new taxes, slapping some on basic products such as bread and diapers.

Earlier this year, US President Donald Trump also shocked the global community when he introduced new tariffs to countries, including US allies, arguing that for years, America had been getting the short end of the stick in a majority of the trade deals it had entered.

On April 7, the U.S. Department of Trade took aim at Kenya for imposing a 50 percent tariff on U.S. corn imports, as well as other regulatory requirements arguing that the move effectively blocked U.S. corn exports to Kenya despite the market's budding potential.

“Kenya imposes a 50 percent tariff on imports of U.S. corn, and imposes burdensome regulatory requirements, effectively blocking U.S. exports of corn,” the Department stated.

Overall, Kenya was hit with a 10% tariff, which was later frozen for 90 days by Trump, who noted that the decision was reached after various consultations between the US and countries affected by the tariffs.

On April 14, Trade CS Lee Kinyanjui revealed that Kenya will appeal the 10 percent tariff, noting, "The suspension (of the tariffs) gives countries a window to put their case forward. I want to confirm that Kenya will actually appeal this ten per cent tariff. We have already drafted the rationale and the reasons as to why.”