Kenya IMF snub pays off as state wiggle room lifts economy

Written by Oral East Africa

Consumer spending in Kenya is picking up on rising car sales as local assemblies ride on lower taxes and rate cuts to push out units.

Motor vehicle production and electricity generation are a major indicators of economic growth in Kenya, tracking production and consumption levels in the market.

Data from the Kenya National Bureau of Statistics show that the assembled units rose 18.5 percent to 13,692 units in the year ended December 2025 from 11,555 the year before on tax incentives and easing monetary policy.

The Central Bank of Kenya has cut its benchmark rate in 10 consecutive policy meetings to 8.75 percent in February 2026 from 13 percent in August 2024, spurring lending in commercial banks which have advanced Kes228.2 billion new loans in 2025.

The Kenyan government has also been able to offer tax cuts on local assemblies while promising consumers further breaks on income tax which would have been unthinkable under an International Monetary Fund (IMF) programme. Kenya opened talks with IMF in October last year, which have remained inconclusive.

What this means: Kenya’s decision to avoid IMF programme restrictions and austerity is paying off as the economy recovers from state and central bank stimulus ahead of an election next year.

Shunning the IMF has however, forced the government to rely on expensive sovereign bonds to raise funds to refinance existing Eurobonds, as oppose to concessional financing.

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