Economy

Kenya takes Sh138bn World Bank loan in months

World bank

Signage of the World Bank logo. PHOTO | POOL

Kenya took Sh137.93 billion from the World Bank and rich countries in four months to April as it raced to plug the more than Sh1 trillion budget deficit.

The new borrowing is part of Sh433.1 billion that the Treasury is targeting from external lenders this financial year ending June.

Documents tabled in Parliament by the Treasury show six of the nine loans were from the World Bank while the rest were from Germany, Italy and France.

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“The total value of the nine loans signed is equivalent to Sh137.93,” said Treasury cabinet secretary Ukur Yatani in the documents.

The new loans were procured between January and April to help fill the Sh1.4 trillion fiscal deficit in the Sh3.3 trillion budget for the 2020/22 financial year.

No commercial loans were procured during the review period when interest rates on the loans per annum ranged between 0.5 percent and 1.25 percent.

The Treasury documents show Kenya borrowed Sh2.08 billion from Germany on February 9 to finance the improvement of roads in Western and Sh2.69 billion on March 17 from France to finance the purchase of French goods and services.

On January 26, Kenya borrowed Sh782.5 million from Italy to improve social and economic development in Malindi and Magarini sub-counties.

The Treasury documents show the government procured Sh60.2 billion from the International Development Association (IDF) –World Bank’s arm for fighting poverty- on March 18 2022 to support Kenya Power infrastructure investment.

Another Sh26 billion was procured on the same day from the International Bank for Reconstruction and Development (IBRD) –World Bank’s development bank- to support Kenya Power towards the green energy path.

The government also borrowed Sh15.3 billion from the IDA to improve the retention of girls in upper primary education and Sh15.7 billion to increase bulk water supply in Mombasa and Kwale.

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On February 9, the government took a loan of Sh10.5 billion from IDA to increase access to financial services and support the Covid-19 recovery of SMEs.

By the end of April Kenya had received Sh162 billion from external lenders, against the Sh433.1 billion target for the financial year.

The Public Finance Management (PFM) Act mandates the National Treasury to periodically update parliament on the country’s debt status.

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