NAIROBI — The International Monetary Fund (IMF) executive board has approved a $1.2 billion loan facility for Kenya, specifically structured to finance climate-resilient infrastructure. The credit line, funded through the Resilience and Sustainability Trust (RST), carries highly concessionary terms with a 20-year maturity and a 10.5-year grace period.
Nairobi plans to use the funds to expand the Olkaria Geothermal Power Station in the Great Rift Valley, aiming to add 250MW of clean baseload power to the national grid. Geothermal energy already accounts for over 40% of Kenya’s power generation.
Amina Bello reports: “This funding is a major endorsement of Kenya’s green energy leadership. It also eases balance-of-payment pressures. Kenya successfully settled its Eurobond obligations earlier this year, but foreign reserves remain tight. This IMF package provides both dollar liquidity and project-specific development capital.”
The funding comes with strict conditionalities. Kenya must complete governance audits of its state-run utility, Kenya Power, and implement transparent public procurement disclosures for all climate projects.
“These reform requirements will test the government’s political will,” says local economist Odhiambo Vance. “However, the alternative was reliance on expensive international capital markets. Earmarking these loans for geothermal energy guarantees that the debt goes into productive assets that reduce reliance on imported heavy fuel oils, protecting the trade balance over the long run.”