Kenya negotiates $750 million loan from World Bank to support budget

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Kenya said it is negotiating with the World Bank for a $750 million loan for budgetary support.

The East African nation has multiple development funding programmes, worth billions of dollars, with the Washington-based lender, but the funding bypasses the Treasury and is usually channelled straight into the projects.

A source told Reuters that if the $750 million loan gets approved, it will be the first time in years the World Bank is putting cash straight into the Treasury to be used at the discretion of the government.

The loan comes under the bank’s so-called development policy financing and is designed to support the government’s policy and institutional reforms and help make economic growth more inclusive.

Kenya raised $2.1 billion in a sovereign bond this month, but some critics have expressed concerns over the country’s growing debt burden.

There has been a jump in government borrowing since President Uhuru Kenyatta came to power in 2013 – a rise that some politicians and economists say is saddling future generations with too much debt.

Kenya’s public debt as a percentage of gross domestic product (GDP) has increased to 55% from 42% when Kenyatta took over. The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.

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