The World Bank has approved Ksh85 billion ($750 million) loan aimed at funding Kenya to assist in economic recovery from the pandemic.
The funding labeled Development Policy Operation (DPO) is aimed at helping the country strengthen its sustainability through reforms that are hoped to improve greater transparency and fight against corruption.
Alex Sienart, senior economist for the World Bank says, “The government’s reforms supported by the DPO help reduce fiscal pressures by making public spending more efficient and transparent, and by reducing the fiscal costs and risks from key state-owned entities.”
Kenya visualizes implementing reforms such as promotion of transparency and efficiency spending, investments in green energy, and building governance structures in addition to using cash from the program.
Other than provision of funding for budget boost, the loan proceeds are to be used in strengthening Kenya’s store of usable foreign currency as it serves like a major cushion for the shilling in payment of external debt and utilities. The public procurement shifted to an electronic platform to decrease chances of corruption as part of the DPOs fiscal management reforms.
This is a second loan in the two-part series that began in 2020 with the goal of providing Kenya with a low-cost budget financing option. Hence, Kenya has received its fourth loan from the DPO facility, bringing the total amount borrowed to ksh371.8 billion ($3.25billion).
The yearly loans total interest cost for Kenya is 3 per cent, which is a reasonable rate when compared to commercial loan interest rates.
Apart from the World Bank, Kenya is also in an ongoing program with the International Monetary Fund (IMF). The amount the country is expected to access from the IMF is Ksh 267.7B ($2.34B) by June 2024. As of December 2021, Kenya has accessed Ksh111.3B($972.6B).