Kenya secures Ksh 106B from World Bank for budgetary support

Kenya has secured 106 billion shillings from the World Bank to plug the budget deficit.  

National Treasury Cabinet Secretary Ukur Yatani through his twitter handle confirmed the Development Policy Operation approval which he lauded as confidence the lender has in Kenya’s policy reforms despite the weak macro framework.

WB Board gives full approval to Kenya’s DPO of USD 1Billion. This is the largest DPO we’ve ever received. The fact that WB 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.

— Amb. Ukur Yatani™- EGH ?? (@BaloziYatani) May 20, 2020

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At the beginning of May, Kenya got a short in the arm when the International Monetary Fund approved 73 billion shillings to support the country’s response to Covid-19.

The pandemic is now causing policy makers at Treasury headaches on how to salvage the economy amid the crisis.

According to Yatani the pandemic has disrupted plans to reduce fiscal deficit to below five percent within the next three years with revenue shortfall expected to widen in the current financial year.

KRA was facing a collection shortfall of Kshs 212B as of March, which is expected to widen.

Budget deficit is further projected to hit 8.2% in the current financial year which ends in June.

Through his twitter handle, Yatani says the Development Policy Operation is the largest Kenya has ever received from the lender.

He says,” The fact that the 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 policy reforms.”

The 106 billion shillings DPO is meant for budgetary support in the current financial year.