According to a press release from the global financial institution, the money will help President William Ruto’s administration address short-term fiscal pressures.
Additionally, the money was advanced at an opportune time to accelerate a more prosperous, green and inclusive future.
“The new USD1.2 billion Kenya Fiscal Sustainability and Resilient Growth Development Policy Operation (DPO), the first in a series of three, has been prepared under an improved macroeconomic environment following government action to address the challenges that had overshadowed the economy, including tight liquidity pressures, depressed investor confidence and limited capital inflows that had resulted in a rapidly depreciating shilling,” the press release read in part.Ruto’s administration is expected to use the money to address structural constraints in Kenya’s public finances.
With Treasury Cabinet Secretary Njuguna Ndung’u expected to deliver the budget statement for the 2024/25 financial year on June 13, the World Bank loan will be used to alleviate fiscal pressures and promote a more efficient and sustainable budget.
“The DPO will foster more competitive and inclusive product and labour markets,” the World Bank noted further. Lastly, the money will be used to strengthen climate action, which has been a key agenda of President Ruto. He envisions leading the country in planting 15 billion trees during his tenure as Head of State.
“On climate, the DPO will support Kenya’s ambitions on green public transport, increasing forest cover, and leveraging climate finance, including through carbon credits and green and sustainability-linked bonds,” it was reported.
CS Ndung’u is expected to continue with the establishment of a Treasury Single Account as well as wage bill consolidation.
Other key reforms the World Bank expects Kenya to push forward include a modernised and enhanced social protection system as well as the removal of county-level distortions through the fragmented licensing systems.
With Ruto eyeing foreign direct investments, the Ksh156 billion loan is expected to present an opportunity to open the Information and Communication Technology sector to more foreign investment.
World Bank further expects a deliberate commitment from Ruto’s administration to offer refugees better access to services and jobs.
