Kenya seeks Ksh.154B World Bank, IMF loans

Kenya is hoping to raise Ksh.154 billion in debt from the World Bank and the International Monetary Fund (IMF) before the end of June this year.

The expected flows which cover about 36 per cent of the country’s external financing needs to the end of the current financial year (Ksh.427.5 billion) are viewed by the Treasury as the cheapest option to plugging the Ksh.1 trillion budget hole.

The National Treasury will be seeking to repeat last year’s fete which saw it tap concessional loans from both multilateral lenders midway through last year.

In May, Kenya for instance tapped Ksh.78.3 billion ($739 million) from IMF’s rapid credit facility (RCF) and Ksh.106.7 billion ($1 billion) from World Bank’s development program operations (DPO).

Having already indicated plans to access Ksh.253 billion ($2.3) billion from the IMF across three years in November, Kenya is awaiting a fresh Ksh.79 billion disbursement from the RCF by June according to new budget revisions published by the exchequer this week.

Subsequently, Treasury has trimmed expected flows from the World Bank by half to Ksh.75 billion from an originally scheduled Ksh.150 billion.

Moreover, the country has cut its projected funding from the African Development Bank (AFDB) to Ksh.25 billion from Ksh.50 billion.

Other external funding sources for the year include Ksh.111 billion in semi-concessional loans and Ksh.6.7 billion in commercial loans.

Over the medium term, the National Treasury projects more loan disbursements from World Bank’s DPO- Ksh.149.3 billion in the 2021/22 financial year, Ksh.131.1 billion (22/23) and Ksh.136.4 billion each for the 2023/24 & 2024/25 financial years.

Loans from the IMF are however scheduled to dry up after next year when the Treasury will be eyeing Ksh.54 billion from the RCF.

In spite of accessing cheap financing, funding from the pair will nevertheless come with strict terms including the tightening of fiscal consolidation by government alongside the full disclosure of debt.

Moreover, Kenya’s participation in the Debt Service Suspension Initiative (DSSI) has been linked to the country’s need for concessional funding.