The World Bank has provided Kenya with an additional Ksh85 billion ($750 million) in funding to aid in the country’s economic recovery from the pandemic.
The money, dubbed the Development Policy Operation (DPO) fund, will help the country strengthen its sustainability through reforms that are hoped to contribute to greater transparency and anti-corruption efforts.
“The government’s reforms supported by the DPO help reduce fiscal pressures by making public spending more efficient and transparent, as well as by lowering the fiscal costs and risks from key state-owned entities,” said Alex Sienaert, senior economist at the World Bank.
This is the second installment of a two-part loan series that began in 2020 with the goal of providing Kenya with low-cost budget financing while also implementing institutional and policy reforms.
In addition to using program funds, Kenya is expected to implement reforms such as promoting transparent and efficient spending, investing in green energy, and constructing governance structures.
Previously, as part of the DPOs’ fiscal management reforms, public procurement was transferred to a new electronic platform to reduce the possibility of corruption.
The loan proceeds are expected to strengthen Kenya’s store of usable foreign currency, which serves as a significant cushion for the shilling in the payment of external debt alongside utilities.
Kenya has already received its fourth DPO loan, bringing the total amount borrowed to Ksh371.8 billion ($3.25 billion).
The total annual interest cost of the loan in Kenya is 3%, which is a reasonable rate when compared to commercial loan interest rates.
Kenya, in addition to the World Bank, is a participant in an ongoing program with the International Monetary Fund (IMF).
The country is expected to receive Ksh 267.7 billion ($2.34 billion) from the IMF by June 2024.
Kenya has accessed Ksh111.3B (US$972.6B) as of December 2021.