World Bank Loan to Kenya: The government of President Uhuru Kenyatta is set to receive a fresh Sh. 107 billion loan from World Bank. This is after the world lending body approved the disbursement of a $1 billion loan to Kenya from its Development Program Operations (DPO) kitty.
According to the National Treasury Cabinet Secretary Ukur Yatani, the newly acquired funds will be channeled towards budgetary support. “World Bank Board gives full approval to Kenya’s DPO of $1 billion. This is the largest DPO we’ve ever received. The fact that World Bank does not provide budget support to countries with weak macro-framework is a testimony of the confidence levels of the bank in our new policy reforms,” he said.
The outgoing World Bank Country Director for Kenya, Felipe Jaramillo said that the loan was highly concessional and way cheaper than commercial debt. “Its approval is timely, since it will help fill the financing gap generated by the severe, ongoing shock to Kenya’s economy,” he said. “This is in contrast to the cost of borrowing Eurobonds with the seven-year bond at seven percent and the ten-year bond at eight percent.”
The loan is the second part of a two-operational programmatic series aimed at creating fiscal buffers over the the medium term and crowding in private investment. Last year, the World Bank made a similar disbursement to the exchequer to the tune of Sh. 80 billion.
Of the total amount, $750 million, which will come from the International Development Association, would be repaid over a 30-year period, after a grace period of five years, at 1.35 percent interest. The second component of $250 million, which will come from the International Bank for Reconstruction and Development, will have an interest rate of about two percent. World Bank Loan to Kenya.