The World Bank has approved Sh87.5 billion (USD750 million) Aid to the government in a Development Policy Operation that will help strengthen fiscal sustainability through reforms that contribute to greater transparency and the fight against corruption.
The DPO is the second in a two-part series of development operations initiated in 2020 that provides low-cost budget financing along with support to key policy and institutional reforms.
In 2019, Kenya qualified for the World Bank’s Development Policy Operations (DPO), which lends cash directly to the Treasury for budget support instead of financing specific projects.
The loan comes with an annual interest rate of about 3.0%.
According to World Bank Country Director for Kenya Keith Hansen, Kenya has been making efforts in instituting critical reforms and the World Bank will continue to support the efforts, which are going a long way in positioning Kenya to sustain a strong economic growth performance.
“The government of Kenya has maintained the momentum to make critical reforms progress despite the disruption caused by the pandemic,” said Keith Hansen, country director for Kenya.
Among the reforms the government has put in place in the area of public procurement is a new electronic platform.
“By the end of 2023, the program aims to have five strategically selected ministries, departments, and agencies, procuring all goods and services through the electronic procurement platform,” the bank said in a statement.
The program will also support energy reforms, by creating a platform for clean energy investments which has the potential to attract more investors, the World Bank said.
Kenya has, under President Uhuru Kenyatta, been on what citizens are calling a “borrowing Spree” to fund development projects that have seen the public debt rise to the annual net borrowing increase to Ksh 7.25 trillion by November 2020.
Kenya’s overall public debt increased from 48.6% of GDP at the end of 2015 to an estimated 69% of GDP at the end of 2020.