Kenya takes 138 billion shillings loan from World Bank in months


Economy

Kenya takes 138 billion shillings loan from World Bank in months


World Bank logo signage. PICTURES | BOWL

Kenya took 137.93 billion shillings from the World Bank and rich countries in the four months to April as it rushed to close the budget gap of more than 1 trillion shillings.

The new borrowing is part of the 433.1 billion shillings the Treasury is targeting from external lenders in this fiscal year ending in June.

Documents tabled in Parliament by the Treasury show that six of the nine loans came from the World Bank while the others came from Germany, Italy and France.

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“The total value of the nine signed loans is equivalent to 137.93 shillings,” Treasury Cabinet Secretary Ukur Yatani said in the documents.

The new loans were granted between January and April to help bridge the 1.4 trillion shillings budget shortfall in the 3.3 trillion shillings budget for the 2020/22 financial year.

No commercial loans were contracted during the reporting period when interest rates on loans per annum ranged between 0.5% and 1.25%.

Treasury documents show that Kenya borrowed 2.08 billion shillings from Germany on February 9 to finance road improvements in the west and 2.69 billion shillings on March 17 from France to finance the purchase of French goods and services.

On January 26, Kenya borrowed 782.5 million shillings from Italy to improve the social and economic development of Malindi and Magarini sub-counties.

Treasury documents show that the government bought 60.2 billion shillings from the International Development Association (IDF) – the World Bank’s arm to fight poverty – on March 18, 2022 to support investments in the Kenya Power infrastructure.

A further 26 billion shillings were purchased on the same day from the International Bank for Reconstruction and Development (IBRD) – the development bank of the World Bank – to support Kenya Power on the path to green energy.

The government has also borrowed 15.3 billion shillings from IDA to improve retention of girls in upper primary education and 15.7 billion shillings to increase bulk water supply in Mombasa and Kwale.

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On February 9, the government took out a loan of 10.5 billion shillings from IDA to increase access to financial services and support the recovery of SMEs in the face of Covid-19.

By the end of April, Kenya had received 162 billion shillings from external lenders, against the target of 433.1 billion shillings for the financial year.

The Public Financial Management (PFM) Act obliges the National Treasury to periodically inform parliament of the state of the country’s debt.

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