By Robai Ludenyi
Kenyans may have to wait a little longer for the much-anticipated Sh96.9 billion World Bank loan, after the global lender introduced a new set of conditions before the funds can be released. The World Bank now wants Kenya to narrow its growing budget deficit, the gap between what the government collects in taxes and what it spends before the money is disbursed.
This move has put the Treasury in a tight spot, as the government was banking on the loan to ease the pressure on public finances and support ongoing development projects. The funds were expected before the end of June 2025, but the delay means Kenya must first convince the World Bank that it is serious about managing its debt burden and spending habits.
Currently, Kenya’s debt-to-GDP ratio stands at about two-thirds of the economy, well above the 55 percent level that many economists consider safe. This simply means that the country owes much more than it can comfortably afford to repay. For the World Bank, this is a red flag; it fears that lending more money to a heavily indebted nation could make matters worse.
Sources familiar with the discussions say the World Bank has requested what it calls a “macro-adequacy assessment”, which is basically a health check on Kenya’s economy. The assessment will help determine whether the government can handle more loans without slipping deeper into debt distress. Until that report satisfies the Bank’s conditions, the money will remain frozen.
The delay could complicate the government’s plans to plug gaps in the national budget. Without the World Bank’s support, the Treasury may have no choice but to raise more taxes or cut down on spending, neither of which will be easy in a struggling economy.
Ordinary Kenyans are already feeling the pinch from high living costs, new taxes, and rising food prices. Many now fear that more austerity measures could make life even harder. Economists warn that Kenya must learn to live within its means, arguing that while borrowing can help fund development, reckless debt can choke the economy in the long run.
As the negotiations continue, all eyes are on Treasury officials to see whether they can strike a deal that both reassures the World Bank and protects the Kenyan public from more financial pain.
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The author is Robai Ludenyi. Journalist and Media Innovator