Kenya’s ambitious plan to fund major infrastructure projects using future tax revenues is now under scrutiny after the International Monetary Fund ruled that such funds must be recorded as public debt, a move that could significantly reshape the country’s borrowing profile and fiscal strategy.
In a report, the IMF revealed that Kenya has raised about Ksh335 billion (USD2.6 billion) by securitising future tax flows to finance large-scale projects. This approach allows the government to use expected tax income as collateral to access funds upfront, supporting developments such as roads, railways, stadiums, and airports without initially reflecting the obligations in official debt figures.
However, the IMF insists these funds must be classified as debt under international statistical standards. It cited projects including Talanta Stadium (funded through the sports levy), the Mau-Rironi dual carriageway (fuel tax), the Standard Gauge Railway extension from Naivasha to Malaba (import duty), and upgrades at Jomo Kenyatta International Airport (passenger tax).
The Fund directed that such securitisation proceeds be treated either as loans to a designated unit or as direct government borrowing, effectively tightening oversight and limiting off-budget financing flexibility.
This stance puts pressure on the National Treasury, which has previously argued that such arrangements should not count as debt. Officials including Cabinet Secretary John Mbadi recently met IMF Managing Director Kristalina Georgieva in Washington, D.C., where discussions focused on Kenya’s economy, inflation, and global risks, with assurances of continued IMF support.