Kenya seeks a fresh $750 million loan from the World Bank
Wednesday December 07 2022
Keith Hansen, the World Bank Country Director for Kenya, Rwanda, Somalia and Uganda speaking on December 6, 2022 in Nairobi. Kenya is seeking a $750 million concessional loan from the World Bank. PHOTO | DENNIS ONSONGO | NMG
Kenya is in talks with the World Bank Group for a fresh $750 million (Ksh92.1 billion) concessional loan to be secured before the end of June next year.
This will be Kenya’s fifth loan under the World Bank’s Development Policy Operation (DPO) framework, which has seen the country access $3.25 billion (Sh399 billion at the present exchange rate) from the Bretton Woods institution. The loan will be part of the Ksh280.7 billion ($2.3 billion) earmarked for external borrowing in the current financial year.
Read: CBK gives State Sh4bn to plug budget deficit
“During the current IDA-20 cycle, the government has lined up an additional DPO of approximately $750.0 million for the current financial year. The proposed package under discussion with the World Bank aims at promoting sustainable, resilient and inclusive growth.
"This will also promote human capital development as a major input to economic growth”, Prof Njuguna Ndung’u, the Cabinet Secretary for the National Treasury, said during the launch of the 2023 – 2028 Country Partnership Framework between the government and World Bank.
Also read: Kenya defers Sh85bn loan repayments on cash crunch
Prof Ndung’u further indicated that the government had been negotiating for a Sh126 billion ($1 billion) financing package but the World Bank stayed put at Sh92 billion ($750 million). The DPO is a framework through which the World Bank supports a member country’s programme of policy and institutional actions geared towards promoting growth and sustainable poverty reduction.
The last DPO financing received by Kenya was on June 10 last year when the World Bank approved Sh92 billion at a total annual interest and service cost of 3.1 per cent. Part of the conditions attached to the 2021 DPO were that the country establishes an electronic procurement platform for the public sector for more transparency and to weed out corruption. Other conditions were reforms at Kenya Power and the National Hospital Insurance Fund (NHIF).
Read: Kenya debt repayment to China triples in July
The National Treasury has said that accessing low-cost financing under the World Bank’s DPO framework aligns with ongoing efforts to steer Kenya towards a more sustainable fiscal path. Kenya had earlier planned to source Sh105.6 billion through external commercial financing (Eurobond issuance) but shelved the same in view of a steep rise in interest rates in the global markets.