The World Bank has approved Kenya's second Sh80.9 billion ($750 million) loan under its two-part tranche Development Policy Operation (DPO).
The loan, like the previous one secured in June 2021, goes towards bridging the huge budget deficit for the post Covid-19 economy recovery plan.
The DPO is a loan series, through which the World Bank provides low-cost budget financing along with support to key policy and institutional reforms.
The loan attracts an annual interest of approximately 3.0 per cent.
The funding organised under three pillars will be directed towards fiscal and debt reforms, electricity sector and public-private partnership and governance strengthening framework.
The bank said some of the funds will be channelled towards setting up an electronic procurement system for government procurement to improve transparency.
By the end of 2023, Kenya aims to have five strategically selected ministries, departments, and agencies, procuring all goods and services through the electronic procurement platform.
“The Government of Kenya has maintained the momentum to make critical reforms progress despite the disruption caused by the pandemic,” World Bank Country Director for Kenya Keith Hansen said.
She said the bank through the DPO, is pleased to support the efforts which will help Kenya sustain its strong economic growth performance and steer it towards inclusive and green development.
The country’s total public debt was computed at Sh8.2 trillion as of December 31 last year. This means that the country’s debt to GDP is at just above 76 per cent.
The Covid-19 pandemic has increased poverty levels in Kenya due to jobs and earnings losses.
Although the economy has been recovering and efforts to reduce poverty have resumed, the overall poverty rate is not expected to fully recover and fall below its pre-crisis level until mid 2022.
Kenya’s economy staged a significant rebound in 2021, albeit with considerable variation in conditions across sectors.
The economy is expected to continue its strong recovery trajectory with a GDP growth projected to be 5.8 per cent for 2022, and 5.5 per cent on average in 2023–25.
