The government of Kenya has formally requested a $750 million loan from the World Bank to help fund its development projects. The loan would be used to promote sustainable, resilient and inclusive growth in Kenya since the World Bank has been a major source of development financing for many African nations.
Kenya has asked the World Bank for a budget support loan of $750 million to help cover its funding needs for the financial year to the end of next June, the finance minister said on Tuesday.
The loan would help cover the country’s shortfall in revenue and support its budget for the coming year. Kenya is one of the world’s poorest countries, and its economy has been hit hard by the global pandemic.
Kenya is one of the world’s poorest countries, and its economy has been hit hard by the global pandemic. The World Bank has already provided $1.5 billion in emergency funding to help the country cope with the pandemic.
In a recent announcement, the Kenyan Minister of Finance, Njuguna Ndung’u, said that the government was in talks with the World Bank for new financing. He did not disclose the amount involved in these negotiations, but said that the talks were progressing well. This new financing would be used to help fund various development projects around the country. If successful, this could be a major boost for Kenya’s economy.
In a speech at a World Bank event on Tuesday, Ndung’u said that the proposed package under discussion with the World Bank aims to promote sustainable, resilient, and inclusive growth. He noted that this would require significant investments in sectors such as education, health, and infrastructure. Ndung’u also emphasised the importance of inclusive growth, saying that it is essential for reducing poverty and promoting shared prosperity.
President William Ruto, who was sworn into office in mid-September, is seeking less costly loans after a debt-fuelled infrastructure construction drive by his predecessor saddled the country with high-interest commercial debt.
The new president is looking to tap into cheaper sources of financing, such as development bank loans, to fund his ambitious infrastructure plans. This is a departure from the previous administration which relied heavily on commercial debt to finance its construction projects.
The high-interest debt has put a strain on the country’s finances, and President Ruto is keen to reduce the burden. His infrastructure plans are crucial to the country’s development, and he is hopeful that cheaper financing will help make them a reality.
The lending instrument under discussion with the World Bank is a Development Policy Operations loan, Ndung’u said. This type of loan is usually tied to a pre-agreed policy area, and the Kenyan government is currently discussing which policy area would be most appropriate for this loan. Ndung’u said that the government is hopeful that the loan will be approved soon, as it would provide a much-needed boost to the economy.
Kenya qualified for that type of financing in 2019 and it has since received four such loans, the last one in March. The loans have helped Kenya finance various development projects. Some of the projects that have been financed include the construction of roads and bridges, the improvement of water and sanitation facilities, and the expansion of access to education and healthcare. Kenya is expected to continue to receive such loans in the future, which will help it further develop its infrastructure and improve the quality of life of its citizens.