Kenya has received a Sh80.9 billion ($750 million) loan from the World Bank to support its budget and help the East African economy recover from the effects of the Covid-19 pandemic, the multilateral lender said on Friday.
The Kenyan government has been pushing hard to secure foreign funding to fill a wide budget deficit before its financial year closes at the end of this month.
The loan disbursement is part of the World Bank’s Development Policy Operations (DPO), which lends cash for budget support instead of financing specific projects.
The bank said some of the funds would go towards setting up an electronic procurement system for government goods and services to improve transparency.
The World Bank said the concessional loan will have a 3.1 per cent annual interest rate.
Typically, World Bank loans have zero or very low-interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.
On Thursday, Finance Minister Ukur Yatani presented to parliament the 2021/22 budget, with a deficit of 7.5 per cent of gross domestic product, reduced from 8.7 per cent for the current fiscal year ending this month.
The finance ministry forecasts an economic growth of 6.6 per cent this year, recovering from 0.6 per cent in 2020 when sectors like tourism and related services collapsed due to restrictions imposed to curb the spread of Covid-19.