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Kenya Set to Receive $750 Million Loan from the World Bank

Kenya expects to receive a loan of $750 million from the World Bank in the next two weeks to support its budget, the country’s central bank governor Patrick Njoroge said on Thursday. The funds are expected to fill a huge budget deficit as the Kenya budget cycle ends in June 2021.

“There is a loan, the so-called DPO, of an amount of $750 million, which we expect over the next couple of weeks,”  Patrick Njoroge in a news conference.

Kenya qualified for the World Bank’s Development Policy Operations (DPO), in 2019 which lends cash to the Treasury for budget support instead of financing specific projects.

Kenya has been able to access two previous loans from the World Bank in the last two years.

Additionally, Patrick Njoroge said the International Monetary Fund, which approved funding worth $2.34 billion for Kenya in April, is expected to complete its latest review next month, leading to the disbursement of $410 million.

Kenya is also expected to receive more funding from the African Development Bank, assisting the country in closing its current account deficit and boosting its forex reserves.

“We expect the current account deficit to close at about 5.2% of GDP in 2021 and it will be fully financed of course, we also expect an increased level of reserves from the flows.” CBK Governor, Patrick Njoroge.

The government is also poised to issue new dollar bonds to raise $1 billion by the end of June 2021.

During the press briefing, the CBK Governor also announced plans of the national treasury to seek an extension of the G20’s debt-suspension initiative, aimed at helping poorer nations cope with the adverse effects caused by the COVID-19 pandemic.

“It (extension) will free resources that can be used for other purposes, in particular the recovery from COVID,” CBK Governor.

Read also; CBK Retains Benchmark Rate at 7% backed by Recovering Economy.