The IMF says higher global interest rates are raising borrowing costs for African governments, even as market access improves. Kenya faces Ksh1.7 trillion in debt due before June 2027..
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 on international markets, even though access to investors has improved.
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 are cancelling out 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 have risen by more than 100 basis points this year. These bonds are the benchmark for pricing dollar-denominated loans and bonds issued by African governments, so higher US yields can raise borrowing costs even when investors view individual countries more favourably.
The warning comes as Kenya faces a major repayment test, with Ksh1.7 trillion in public debt due before June 2027. That equals 12.7 per cent of Kenya's Ksh13.2 trillion debt stock, and includes Ksh1.06 trillion in principal that the government must either raise funds to repay or refinance through new borrowing.
If the Treasury refinances some of the debt while international rates are high, the replacement loans could cost more and increase future debt-servicing expenses.Kenya has been looking for other sources of funds since its Ksh466.9 billion (US$3.6 billion) IMF programme stalled in March 2025 and expired the following month.
On October 16, 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 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 are asking for a smaller risk premium.
Refinancing maturing debt at higher rates could raise the government's interest bill, leaving less room in future budgets for development projects and public services. The Treasury is already balancing debt repayments against revenue collection and other spending commitments, and rising borrowing costs make that balancing act harder.