Kenya Receives USD 750M from World Bank for Post-Covid Recovery

The World Bank has approved 750 million US dollars equivalent to 85.77 billion shillings to help Kenya recover from the Covid-19 pandemic by strengthening fiscal sustainability through reforms that contribute to greater transparency and the fight against corruption.

The loan under the Development Policy Operation (DPO) is the second in a two-part series of development operations initiated in 2020 that will help Kenya in a low-cost budget financing and support key policy and institutional reforms.

According to World Bank, the DPO will help Kenya make spending more transparent and efficient and enhance domestic debt market performance. In addition, it will help Kenya in boosting the electricity sector and public-private partnership to push the country on an efficient, green energy path and boost private infrastructure investments.

The DPO’s Multi-sector reforms seek to strengthen the governance framework of Kenya’s natural and human capital, which includes the environment, land, water, and healthcare.

“The Government of Kenya has maintained the momentum to make critical reforms progress despite the disruption caused by the pandemic. Through the DPO instrument, the World Bank is pleased to support these efforts that are positioning Kenya to sustain its strong economic growth performance and steering it towards inclusive and green development,” World Bank County Director for Kenya, Keith Hansen, said.

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The program aims to have five strategically selected ministries, departments, and agencies, procuring all goods and services through the electronic procurement platform by 2023.

The World Bank uses dPOs to support a client country’s ambitious policy and institutional reform plan to help to accelerate inclusive growth and poverty reduction.

The total annual interest cost of the Kenya DPO is approximately 3.0 percent.

Kenya has increased its public debt by more than one trillion in the year of the covid 19 pandemic. According to the 2021 Budget policy statement, Kenya’s public debt stood at 7.06 trillion shillings as of June 2020, equivalent to 65 percent GDP.

Kenya’s debt has been rising fast, sending chills down the spines of policymakers who feel the country would soon be unable to pay the debts. The Senate was forced to place the debt ceiling at 9 trillion shillings last year to control Kenya’s roaring appetite for borrowing.

According to the 2021 budget policy Statement, Kenya’s public debt will rise to 8.6 trillion shillings by June 2022.