Kenya is hoping to secure a £1 billion loan from the World Bank to boost its dwindling foreign exchange reserves. The loan is scheduled to be approved at the World Bank Group board meeting on 26 May under its Development Policy Operation framework. If approved, the loan will be disbursed within a month.
Development Policy Operations are non-earmarked loans, credits or grants that support a country’s economic and sectoral policies and institutions. The World Bank is requesting reforms in exchange for the loan, including strengthening domestic revenue mobilisation with a focus on the digital economy.
The loan was initially set at $750 million, but in March of this year, the World Bank increased it to $1 billion. Kenya’s external debt has reached KES344.4bn ($2.58bn) due to the weakening shilling against the US dollar.
This loan is expected to aid Kenya in addressing the economic challenges caused by the COVID-19 pandemic. The country’s economy has been hit hard by the pandemic, with many businesses struggling to stay afloat.
One of the significant issues that Kenya faces is the pressure on its foreign exchange reserves. The country has been experiencing a decline in foreign exchange reserves, which have fallen from $8.5 billion in February 2020 to $7.2 billion in March 2021. This has resulted in the Kenyan shilling weakening against the US dollar.
The World Bank’s loan will provide Kenya with much-needed foreign exchange reserves, which will help stabilise the country’s economy. The loan will also support Kenya’s economic and sectoral policies, which will aid in the country’s post-pandemic recovery.
Kenya’s finance minister, Ukur Yatani, has expressed his optimism about the loan, stating that it will be critical in supporting the government’s efforts to build back better from the pandemic. He also noted that the loan would provide the country with a lifeline and help stimulate economic growth.
The World Bank’s £1 billion loan to Kenya will provide much-needed foreign exchange reserves and support the country’s economic and sectoral policies. The loan is expected to aid Kenya’s post-pandemic recovery efforts and help stabilise its economy. The country’s finance minister has expressed optimism about the loan, and its approval is eagerly awaited.