The World Bank has approved the disbursement of Ksh.80.9 billion ($750 million) loan to Kenya to anchor financing to government in the post COVID-19 pandemic era.
The loan, tapped from the institution’s Development Policy Operations (DPO) is expected to support measures to improve medium term fiscal and debt sustainability metrics.
“The operation prioritizes reforms in hard hit sectors, such as healthcare, education, and energy, which have been made urgent by the impacts of the COVID-19 crisis,” said World Bank Kenya Country Director Keith Hansen.
“In recognition of the severity of the crisis and need for a comprehensive response, we are supporting the government’s post COVID-19 economic recovery strategy, which is designed to mitigate the adverse socioeconomic effects of the pandemic and accelerate economic recovery and attain higher and sustained economic growth.”
The new disbursement is part of external financing for the closing 2020/21 financial year which ends on June 30.
Kenya is additionally expected to tap nearly Ksh.150 billion including Ksh.44 billion representing the second tranche of a greater Ksh.255 billion three-year facility, Ksh.13 billion from the African Development Bank (AfDB) and fourth Eurobond issue amounting to Ksh.123.8 billion this month.
In return, the World Bank expects Kenya to undertake reforms including the establishment of an electronic procurement platform for the public sector to increase accountability in public spending.
From its list of agreed reforms with Kenya, the World Bank expects the measures to yield in savings equivalent to Ksh.280.3 billion ($2.6 billion).
Kenya is expected to rely on multilateral lenders such as the World Bank and the IMF for financing in the new financial year commencing on July 1.
An analysis of planned borrowing in the next fiscal cycle shows Kenya will borrow an average Ksh.2.6 billion daily.