Nothing was done to shield Kenya from increased external debt after the country’s debt repayment rating was downgraded last week. As Kenya is expected to receive $1 billion (Sh129 billion) in budgetary support in June, the World Bank Group recently approved an increase of Sh32 billion in Kenya’s loan request.
Kenya will receive additional resources through the Development Policy Operations (DPO) facility distribution to help close the budget deficit in the fiscal year 2022–23, which runs from June to June.
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“The program development objective is to enhance sustainable, inclusive, and green growth by sustainably creating fiscal space, increasing competitiveness to boost agricultural exports, and improving governance to facilitate inclusive private sector-led development,” the World Bank states.
Development Policy Operations (DPO) finance from the World Bank offers quick disbursement to help countries fulfill their current or anticipated needs for development financing.
The multilateral lender’s board has scheduled no meetings with Kenya for the following three months until May, therefore it is anticipated that the loan would be authorized towards the conclusion of the current fiscal year.
Kenya’s depleting foreign exchange reserves, which have been reduced by rising external debt repayments and the Central Bank of Kenya’s support for the shilling through complex currency sales, are anticipated to be replenished by the DPO funding scheduled for June.
When the World Bank’s National Partnership Framework for 2023–28 was introduced in December, Treasury Cabinet Secretary Njuguna Ndung’u said that although Kenya was aiming for $750 billion at the moment, talks were taking place to raise the amount to $1 billion.
The DPO is the second of two development operations that were started in 2020 to offer budget financing at low costs as well as support for significant institutional and policy reforms.
Kenya received an Sh80.9 billion ($750 million) loan from the World Bank in 2021 to help with its budget and aid the nation’s recovery from the Covid-19 outbreak.
