The Kenyan government has managed to convince the World Bank to enlarge its loan to the East African nation from an initial 96.8 billion Kenyan shilling ($750 million) to 129 billion shilling ($1 billion) in support of the country's budget in the new 2023/24 financial year, a document published on the Wold Bank's website shows.
The bank updated the details of the projected loan to Kenya, technically called a Development Policy Operation (DPO) facility, on its website on March 2, including the new commitment amount. The loan is still awaiting the approval of the Bretton Woods lender's board before the end of Kenya's current fiscal year in June.
“The program development objective is to enhance sustainable, inclusive and green growth by creating fiscal space in a sustainable manner, increasing competitiveness to boost exports in agriculture and improving governance to facilitate inclusive private sector-led development,” the World Bank noted.
The $1-billion loan to Nairobi comes a few weeks after the World Bank board approved a 22.7 billion Kenyan shilling ($175 million) loan to support food security in the East African country. The disbursements are expected to assist boosting Kenya's foreign-currency reserves, which have plunged to an 11-year low, and support the country's struggling national currency.
The new loan's terms have not yet been disclosed. However, in 2021, the World Bank offered Nairobi the third $750 million loan under the DPO program with a 30-year repayment period, including a grace period of five years, and an interest rate charge of 3% per year.
In early December, Kenya's Treasury Secretary Prof. Njuguna Ndung’u revealed to the media that the agency was engaged in talks with World Bank officials in pursuit of expanding the fifth loan under the DPO program, a low-cost lending mechanism through which the World Bank supports a member country’s policy area and institutional actions, from $750 million to $1 billion.
"During the current International Development Association cycle, the World Bank has lined up additional Development Policy Operation financing of $750.0 million for the current financial year. We have been trying to negotiate that to a $1.0 billion," Ndung’u said at the time, adding that the proposed package "aims at promoting sustainable resilient and inclusive growth."
Kenya has been receiving DPO loans from the World Bank annually since 2019. Cumulative payments as of the end of June 2022 amounted to an overall sum of 419.6 billion Kenyan shillings ($3.25 billion).