Treasury gets Sh20bn AfDB loan for budget, agricultureThursday June 02 2022
Kenya is set to get Sh19.8 billion ($170 million) loans from the African Development Bank (AfDB) this year for budgetary support and agriculture to help its economy recover from the effects of the Covid-19 pandemic and the Russia-Ukraine conflict.
Nnenna Lily Nwabufo, AfDB director-general for East Africa, said the amount Sh11.66billion ($100 million) would go towards budget support to help steer the Kenyan economy back on track amid inflationary pressure.
“We shall provide $100 million budget support to Kenya for this year to help rebuild,” she told the Business Daily in an interview in Accra, Ghana.
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“There will also another $70million support for fertiliser and seeds since the Russia-Ukraine crisis has heavily affected the agri-based economy.”
The loan would add to Kenya’s recent uptake of debt for budget support even though AfDB downplayed the risk of default.
“Borrowing is not about how much you borrow but what you do with it,” said Ms Nwafubo.
A report Treasury Cabinet secretary Ukur Yatani tabled in Parliament two weeks ago showed that the State borrowed nine new loans between January and April, totalling Sh137.93 billion to finance projects.
Six of the new loans are from multilateral lenders and three from bilateral lenders and were contracted between January 1 and April 30.
Some Sh60.3 billion was sourced from the International Development Association on March 18, which will finance fiscal and debt reforms to make spending more transparent and efficient and enhance domestic debt market performance.
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The loan is also meant to finance the electricity sector and the public-private-partnership reforms to strengthen the cornerstone utility (Kenya Power), place Kenya on an efficient, green energy path and boost private infrastructure investment.
The funds will also finance strengthening environmental and natural resource governance, combating climate change, and improving healthcare, including the pandemic response.
The Sh26.7 billion acquired from International Bank for Reconstruction and Development on March 18 is for the second accelerating reforms for an inclusive and resilient recovery development policy financing.