Kenya close to securing Ksh.92 billion World Bank loan

Kenya is on the verge of obtaining a Ksh.92 billion ($750 million) loan from the World Bank Group as the country moves to tie down cheap financing.

On Tuesday, Treasury Cabinet Secretary Prof. Njuguna Ndung’u disclosed the government was in advanced talks for the loan disbursement even as the value of the facility falls below its expectations of accessing Ksh.122.7 billion ($1 billion).

“The proposed package under discussion with the World Bank aims at promoting sustainable, resilience and inclusive growth. That will also promote human capital development as a major input to economic management,” he said.

“The current preoccupation by the current administration is to enact innovative solutions for liability management that will also signal active public debt management and sustainability.”

The facility sought after is part of the World Bank Development Policy Operations (DPO) and would be the fifth for Kenya over a five-year period.

The disbursements of the loan are expected before the end of June 2023.

Since 2019, Kenya has tapped Ksh.398.8 billion ($3.25 billion) under the previous four DPOs.

In the bigger picture, the expected financing has been underpinned by the new World Bank Country Framework for Kenya which was launched on Tuesday and which covers the fiscal year 2023 to 2028.

The first objective of the multi-year support program from the World Bank is meant to help Kenya re-create fiscal space that deteriorated due to rising debt service, the COVID-19 pandemic, climate shocks and global headwinds.

“The program will include development policy financing to help accelerate fiscal and investment climate reforms and lower Kenya’s borrowing costs,” noted the new CPF report.

The framework also includes the steady scaling of investments by the International Finance Corporation, World Bank’s private financing arm and guarantees from the Multilateral Investment Guarantee Agency (MIGA), an entity offering political risk insurance and credit enhancement guarantees.