The International Monetary Fund (IMF) has told Kenya that future tax revenues pledged to fund infrastructure projects must be classified as sovereign debt under international statistical standards.
- •The finding directly challenges President William Ruto's infrastructure financing model and could complicate the country's bid for a new IMF lending programme.
- •Kenya has raised at least KSh 335.00 Billion (US$2.59 Billion) by securitizing future tax flows across four projects: a sports levy for the Talanta Sports Stadium, a fuel tax for road construction, import duty collections for a standard gauge railway extension, and a passenger tax for upgrades to Jomo Kenyatta International Airport.
- •The IMF, in a report published on its website, said such arrangements "should be recognized as a debt liability under the international statistical standards."
The Fund outlined two treatment options depending on whether the securitization unit is a legally separate institutional entity: if it is, the proceeds are a loan to that unit; if not, they constitute direct government borrowing. Either way, the liability sits on the sovereign's balance sheet.
National Treasury Cabinet Secretary John Mbadi has consistently resisted that interpretation. His position is that once the state transfers revenue rights to a special purpose vehicle (SPV), the government carries no residual risk. "Once you sell a right to a special purpose vehicle, then there is no risk to the government at all," Mbadi said in earlier public remarks, framing the disagreement as an accounting matter rather than a substantive one.
The dispute has direct stakes for programme negotiations. Kenya's previous US$3.60 Billion arrangement under the Extended Fund Facility and Extended Credit Facility expired in April 2025. An IMF staff mission to Nairobi led by mission chief Haimanot Teferra, which ran from late February to early March, concluded without a financing agreement.
The Fund's post-mission statement said discussions had highlighted the need to strengthen fiscal discipline and build resilience to external shocks, with no IMF Executive Board discussion to follow. Both sides agreed to continue talks at the IMF-World Bank Spring Meetings in Washington, which opened on April 13.
The securitization vehicles at the centre of the dispute are substantial with Kenya Roads Board channelling KSh 7 of every KSh 25 collected per litre of fuel into an SPV that raised KSh 175.00 Billion (US$1.35 Bn). For the SGR extension from Naivasha to Malaba, the government is seeking to pledge up to 90%of Railway Development Levy Fund collections, a 2% import duty charge generating roughly KSh 50.00 Billion (US$386.15 Mn) annually.
Linzi FinCo separately issued a KSh 44.70 Bn (US$345.25 Mn) infrastructure bond on the NSE for the Talanta Sports Stadium.
Image: Talanta Sports City Stadium, Nairobi. The 60,000-seat venue is being financed through a KSh 44.79 Bn infrastructure bond backed by future sports levy revenues, one of four securitization vehicles the IMF wants reclassified as sovereign debt.
If the IMF's classification is adopted, the additional liabilities would be added to a debt stock already under strain. Kenya's total public debt stands at approximately KSh 12.00 Tn (US$92.68 Bn), close to 70% of GDP, with domestic debt having crossed KSh 7.05 Tn (US$54.45 Bn) in February 2026 for the first time. Beyond securitization, the Fund has called for Kenya to expand debt reporting to cover pending bills, pension liabilities, finance leases, and PPP-related obligations.
The government has sought to reduce dependence on IMF financing, mobilizing KSh 588.00 Billion (US$4.54 Bn) in the current fiscal year through the KPC IPO, a Safaricom planned stake sale, and new Eurobond issuances. The securitization accounting question, however, is expected to remain a defining issue in the Washington talks this week.
