A high-level mission from the International Monetary Fund (IMF) is in Kenya for a crucial graft audit as part of discussions for a new financing programme.

The move signals both an opportunity and a test for President William Ruto’s administration, which formally invited the IMF to scrutinise corruption risks ahead of fresh budget talks.

According to Bloomberg, the IMF team will “examine graft risks across six key state functions, including fiscal and central bank governance, the rule of law and public procurement.”

Kenya has in recent months faced intense scrutiny over opaque spending and allegations of irregular procurement—issues that previously triggered widespread anti-tax protests and stalled a prior IMF financing facility.  The delegation’s mandate is to assess these governance weak spots and set a foundation for renewed engagement with the Fund. In October 2024, President Ruto’s government proactively requested this mission, aiming to demonstrate commitment to transparency as it negotiates future financial support.

Prime Cabinet Secretary Musalia Mudavadi confirmed the outreach was made “on Kenya’s own volition,” although Bloomberg notes that pressure from the IMF’s major shareholders influenced the decision.

The graft audit is expected to examine critical areas such as fiscal governance, central bank independence, public procurement systems, and the rule of law.

The findings will be compiled into a governance diagnostic report, which will be shared with Kenyan authorities and released to the public—once approval is granted—before the end of this year. The audit occurs against a challenging fiscal backdrop. Kenya recently concluded its 2021 loan agreement with the IMF after failing to meet key fiscal and structural benchmarks.

Domestic borrowing

The IMF also withheld further disbursements totalling about Sh77 billion amid governance concerns and rising public dissent. Despite requesting a new programme, the Treasury has increasingly turned to domestic borrowing to finance the Sh923 billion budget deficit for 2025/26.  This has alarmed investors concerned about rising interest costs and reduced credit available to the private sector.

The IMF audit now serves as a test of Kenya’s willingness to confront corruption, particularly in public procurement and spending oversight. Positive findings could unlock renewed IMF financing, restore investor confidence, and lower borrowing costs. Weak findings, on the other hand, could heighten fiscal risk and global skepticism.

Domestically, the review carries political weight. With the 2027 elections on the horizon, Ruto must balance the optics of fiscal discipline with increasing demands for public accountability.  Global financial markets are also watching closely. Kenya’s external debt has climbed to over 65 per cent of gross domestic product (GDP), keeping the country under the spotlight of credit rating agencies.

A credible audit and clear reform roadmap could provide much-needed reassurance to investors, both local and international. Kenya was said to be losing $20million every day to graft, according to former President Uhuru Kenya, the claims were however not backed by data.

Over the coming months, the IMF is expected to finalise its audit, release the diagnostic findings, and, depending on the outcome, open discussions on a new financing arrangement—possibly under the Extended Credit Facility.