The downgrading of Kenya’s debt repayment rating last week did little to cushion the country from more external debt. This is after the World Bank Group okayed an increase in Kenya’s loan request by Kshs 32.0 bn. This now means that Kenya will receive Kshs 129.0 bn budgetary support in June.
The disbursement under Development Policy Operations (DPO) facility will provide additional resources to Kenya which will in part plug the budget deficit in the 2022/23 fiscal year to June.
World Bank’s Development Policy Operations financing provides rapidly-disbursing financing to help countries address actual or anticipated development financing requirements.
The loan is expected to be approved late in the current financial year with the published multilateral lender’s board calendar showing no planned meetings with Kenya over the facility through the next three months to May.
Read: Debts Repayment Consumes Half Of Revenue In Three Months Of 2022/2023
Flows from the DPO financing which is due before the end of June are expected to partly replenish Kenya’s depleted forex reserves which have been eroded by higher external debt repayments and support for the shilling through hard currency sales by the Central Bank of Kenya.
Treasury Cabinet Secretary Njuguna Ndung’u, speaking at the launch of the World Bank’s Country Partnership Framework for 2023-28 in December said that despite Kenya eyeing USD 750.0 bn at the time, discussions were open to increasing the figure to USD 1.0 bn.
The DPO provides low-cost budget financing along with support to key policy and institutional reforms.
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