The International Monetary Fund (IMF) has raised concerns over the rising cost of borrowing for African governments, warning that higher global interest rates could make it more expensive for countries to raise money from international markets despite improved access to investors.
Zeine Zeidane, Director of the IMF's African Department, said African countries had made progress in reducing the extra interest investors demand when lending to them, but rising global benchmarks were offsetting those gains.
“Market access remains favourable for African economies. In the first nine months of 2026, we have seen issuances worth US$12 billion in Eurobonds. The countries in the region made a lot of efforts to compress and lower the cost of borrowing. Unfortunately, what we see is that the benchmarks themselves are increasing,” Zeidane said.
He pointed to the United States, where yields on 10-year Treasury bonds had risen by more than 100 basis points during the year.
A collage of Cabinet Secretary of the National Treasury John Mbadi (left), and that of the International Monetary Fund Banner.
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Kenyans.co.ke
These bonds provide a benchmark for pricing dollar-denominated loans and bonds issued by African governments, meaning higher U.S. yields can increase the cost of borrowing even when investors view individual countries more favourably.
The concern comes as Kenya faces a major debt repayment hurdle, with Ksh1.7 trillion in public debt due before June 2027.
The Ksh1.7 trillion in repayments represents 12.7 per cent of Kenya’s Ksh13.2 trillion debt stock, including Ksh1.06 trillion in principal that the government must raise funds to repay or refinance through new borrowing.
If the Treasury refinances some of the debt when international interest rates are higher, the replacement loans could cost more and increase future debt-servicing expenses.
At the same time, Kenya has been seeking alternative financing since its Ksh466.9 billion (US$3.6 billion) IMF programme stalled in March 2025 and expired the following month.
On October 16 this year, CBK Governor Kamau Thugge said the country was pursuing fresh multilateral financing from institutions including the African Development Bank (AfDB) and the World Bank to support the current financial year's budget.
The IMF’s concern, however, is not that African governments have lost access to international lenders. Rather, countries may have to pay more for the money they borrow because global interest rates have risen, even where investors demand a smaller risk premium to lend to them.
For Kenya, the timing matters because refinancing maturing debt at higher rates could increase the government's interest bill, leaving less room in future budgets for development projects and other public services.
The pressure also comes as the Treasury balances debt repayments against revenue collection and other spending commitments.
Treasury CS John Mbadi (centre), CBK Governor Kamau Thugge (left) and Treasury PS Chris Kiptoo (right) during bilateral talks with the World Bank’s Regional Vice President for Eastern and Southern Africa, Dr Ndiamé Diop, in Bangkok, Thailand on October 13, 2026.
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Treasury