The Government of Kenya is set to receive a Sh106 billion loan from the World Bank to boost its budget amid the Covid-19 pandemic.
Treasury Secretary Ukur Yatani said that this will be the biggest financing package ever the Kenyan government has received from the World Bank.
Yatani added that the fact that the World Bank doesn’t give budget support to other countries with a weak macro framework is proof that the World Bank has high confidence with the Kenyan government’s new policy reforms.
According to the World Bank’s country representative, Carlos Felipe Jaramillo, out of the $ 1 billion, $750 million credit will come from the International Development Association at an interest rate of 1.35 percent with a 30 year repayment period and a 5 year grace period; $250 million will come from the International Bank for Reconstruction and Development at slightly over 2 percent.
Jaramillo further noted that the Development Policy Operation (DPO) has been in discourse for about two years and resolved to $750 million, which was approved in 2009.
The government will spend the money on affordable housing, subsidized Agricultural input, and enhancing transparency in the management of public funds.
This comes a month after Kenya received $739 million loan from the International Monetary Fund and another $50 million as support from the World Bank for Government’s health system amid the Covid-19 disease, which has so far recorded 1, 029 cases.
Although the World Bank is not sure about Kenya’s debt sustainability amid the pandemic, the pandemic allows for a suspension for any economic consolidation plans to allow a government to mitigate the economic impact that will come as a result of the pandemic.
According to Jaramillo, the World Bank, although it has seen a shift by the Kenyan government towards concessional borrowing, is still concerned about the State’s additional debts.
Jaramillo, however, said that their biggest concern is that the borrowed money is spent transparently in a well accountable manner.