Kenya has officially entered follow-up discussions with the IMF as it seeks a new programme to support its economy following the expiration of its previous US$3.6 billion deal earlier this year.

Key in the dialogue is a contentious issue: Kenya has proposed using securitised loans backed by future revenues to fund infrastructure projects, while the IMF insists such instruments be treated as sovereign debt, thereby affecting Kenya’s borrowing limits and across-the-board debt metrics.

Kenya’s external debt currently hovers around US$40.5 billion, and the government hopes that a new IMF programme will help anchor investor confidence, stabilise the shilling and ensure the sustainability of debt servicing amid growing pressure on the public finances.