The World Bank has approved a Ksh.138 billion loan for Kenya as a budget support facility, just a week after the International Monetary Fund (IMF) concluded a fifth review of the programme with Kenya for a further Ksh.56.8 billion loan.
This is after the multilateral lender ascertained that Kenya has committed to strengthen fiscal policies and undertake prudent debt management measures as part of the terms attached to the latest financing.
World Bank’s new loan is under the Fiscal Sustainability and Inclusive Green Growth Development Programme Operation (DPO).
“In governance, the DPO supports an important set of initiatives to promote objective decision-making through the Conflict-of-Interest Bill, to streamline the state’s orderly exit from commercial investments through amending the State-Owned Enterprises Privatization Act,” the World Bank says.
It comes after the Kenyan government made a request to the World Bank to raise the loan by 33 percent due to tightened global finance conditions.
These conditions have see the country shelve a planned Eurobond issuance which had been set for the fiscal year 2022/23.
Terms of the loan include half of the amount, Ksh.68 billion which will come from World Bank’s International Development Association (IDA).
Under IDA, the facility will target low-cost financing to low-income economies while the remaining.
The remaining half be drawn from the International Bank for Reconstruction and Development, (IBRD) which extends semi-concessional financing.
The repayment plan under the IBRD stretches for 18.5 years with a variable interest rate at 0.85 percent.