IMF Push to Broaden Kenya’s Debt Definition Could Lift Total Above Sh13 Trillion

The International Monetary Fund has called on Kenya to expand its definition of public debt to include pending bills, securitised infrastructure borrowings, and non-guaranteed loans held by state corporations. According to the proposal, such a reclassification would increase the country’s reported debt stock from Sh12.3 trillion to more than Sh13 trillion.

The recommendation follows a recent review of Kenya’s public debt data by the IMF, which argues that the current definition is too narrow. At present, public debt is limited to loans and government securities, a framework the fund says does not meet international statistical standards and excludes significant liabilities that could influence investor and creditor decisions.

IMFData cited in the review shows that pending bills stood at Sh468.5 billion at the end of 2025. State on-lent loans reached Sh1.05 trillion, with Kenya Railways Corporation accounting for Sh547.7 billion of that amount. In addition, fourteen state-owned enterprises held Sh44.9 billion in non-guaranteed debt.

The IMF is also recommending amendments to the Public Finance Management Act and relevant constitutional provisions, which currently restrict public debt reporting to obligations explicitly raised or guaranteed by the national government.

The proposal has set up a direct disagreement with the National Treasury, which has previously rejected all three categories suggested for inclusion. Treasury has also opposed the classification of securitised borrowings, maintaining that once revenue streams are ring-fenced and transferred to special purpose vehicles, the liabilities should not be reflected on the government’s books.

This position applies to arrangements such as the road maintenance levy used to support a Sh175 billion bond and the railway development levy backing a Sh390 billion SGR extension bond. Treasury Cabinet Secretary John Mbadi has described the disagreement as an accounting issue rather than a policy dispute.

However, the debate carries broader implications, as Kenya is seeking a new IMF lending programme after the expiry of its previous 3.6 billion dollar arrangement in April 2024. The unresolved definition of public debt remains one of the key issues delaying the conclusion of a new agreement.