•According to financial experts, several factors are working in Kenya’s favor for this approval.
•The funding is typically disbursed in tranches, contingent upon the country meeting pre-agreed policy and performance benchmarks.
Image: STATE HOUSE
Kenya will receive $1.2 billion (Sh158billion) facility from World Bank should a review set for next Thursday be successful.
The facility under the World Bank Development Policy Operation (DPO6), is however subject to completion of a review on the measures put in place by the multilateral lender, IMF and World Bank Board's consideration and approval.
A Development Policy Operation (DPO) is a financial instrument used by the World Bank to provide budget support to countries for policy and institutional reforms.
Unlike project-specific loans, DPOs support government programs through direct financial assistance to the national treasury, which is then used to implement broad policy measures aimed at economic growth and stability.
The World Bank will hold a board meeting next Thursday, May 30, 2024, chaired by World Bank's Managing Director Anna Bjerde, to discuss Kenya's "First Kenya Fiscal Sustainability and Resilient Growth Development Policy Operations."
The DPOs are designed to help countries achieve specific developmental objectives, such as enhancing fiscal sustainability, improving public sector governance, strengthening social safety nets, or promoting private sector growth.
The funding is typically disbursed in tranches, contingent upon the country meeting pre-agreed policy and performance benchmarks.
According to financial experts, several factors are working in Kenya’s favour for this approval.
So far the country has successfully reduced its budget deficit to 4.4 percent. Additionally, the Kenyan shilling is strengthening, and inflation has declined to 5 percent as of April.
These improvements contribute to a sustainable and robust macroeconomic environment, making the case for the Development Policy Operation stronger.
The overall goal of a DPO is to create an environment conducive to sustainable economic development by addressing key policy challenges and supporting reforms that can lead to improved governance, economic efficiency, and social outcomes.
The outcome of this meeting will be crucial for Kenya’s financial strategy, as the proposed funds aim to bolster fiscal sustainability and promote resilient growth.
If approved, the funds will support Kenya in maintaining its economic stability and implementing necessary reforms for continued development.