World Bank approves $750m for budgetary support to Kenya

The World Bank has approved a $750 million loan to Kenya that focused mainly on support for agriculture and housing.

For the first time in years the World Bank is putting cash straight into the Treasury to be used at the discretion of the government, a source with knowledge of the issue said.

The East African nation has multiple development funding programs, worth billions of dollars, with the Washington-based lender, but for years the funding bypassed the Treasury and is usually channeled straight into the projects. 

The loan, which comes under the bank’s Development Policy Operations, is designed to support the government’s policy and institutional reforms and help make economic growth more inclusive. 

Kenya’s public debt as a percentage of gross domestic product 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.

Typically, World Bank concessional loans have zero or very low interest rates and have repayments periods of 25 to 40 years, with a five-or ten-year grace period.