The International Monetary Fund has told Kenya to reclassify future tax revenues pledged to back infrastructure projects as public debt, a stance that could sharply raise the country’s reported leverage and complicate President William Ruto’s flagship funding strategy.
Kenya has already raised at least $2.6 billion (KSh335 billion) by securitising specific revenue streams. The deals include a sports levy financing a new stadium, a fuel tax earmarked for roads, import duties backing a railway expansion, and passenger charges funding upgrades at Jomo Kenyatta International Airport, the country’s largest. These off-balance-sheet structures have allowed the government to tap private capital without immediately booking new borrowing.
The recommendation, made ahead of fresh talks with the IMF, comes as Kenya’s public debt stands at roughly $92 billion (KSh11.9 trillion), about 68-70 per cent of GDP as of late 2025, and the country remains at high risk of debt distress, according to the latest IMF-World Bank debt sustainability analysis.
Securitisation’s growing footprint
Securitisation has become a key tool for Nairobi to bridge an annual infrastructure financing gap estimated at $4 billion. By ring-fencing future levies, the government has de-risked projects for investors while avoiding direct budget outlays or tax hikes. Yet the IMF’s position signals that such arrangements must now be treated as contingent liabilities, effectively bringing them onto the public balance sheet for debt metrics and programme compliance.
If applied retroactively to the $2.6 billion (KSh335 billion) already raised, the adjustment would lift Kenya’s debt stock by roughly 3 per cent, modest in isolation but significant when layered onto future deals. More importantly, it sets a precedent for any larger-scale securitisations tied to the National Infrastructure Fund.
Ruto’s $38.7 billion bet
The National Infrastructure Fund, signed into law in recent weeks, aims to mobilise $38.7 billion (KSh5 trillion) over a decade for energy (10,000 MW of new capacity), 50 large dams plus thousands of smaller ones, 2,500 km of dual carriageways and 28,000 km of roads. The explicit goal: fund these without adding unsustainable debt or new taxes, relying instead on private capital, pension funds, sovereign wealth vehicles and leverage ratios of up to 12 times.
Ruto has described the fund as a “corporate-style investment vehicle” that packages projects into investable instruments, drawing on local savings and international partners rather than conventional borrowing. Early inflows already include proceeds from the Kenya Pipeline Company stake sale.
For global investors and creditors, the IMF’s directive raises the stakes. Reclassifying securitised flows could tighten fiscal targets under any future IMF programme, potentially delaying disbursements and pushing Kenya toward costlier domestic or commercial borrowing. It also flags heightened scrutiny of contingent liabilities, a perennial concern for frontier-market sovereigns.
Kenya’s external debt remains vulnerable to exchange-rate shocks and export shortfalls, while domestic debt carries refinancing risk from a still-short average maturity profile. Bond investors will watch upcoming Eurobond rollovers and any Panda Bond issuance closely; spreads could widen if perceived fiscal space shrinks.
The IMF’s data-quality assessment of Kenya’s public-sector debt statistics, released this month, underscores the technical push for greater transparency. For Ruto’s administration, the choice is clear: either restructure future securitisations to satisfy the fund or recalibrate the National Infrastructure Fund’s leverage model and the pace of its $38.7 billion (KSh5 trillion) ambition to keep debt metrics on track.
