Kenya (Common Wealth) _ A Ksh138.45 billion ($1.0 billion) budget support loan from the World Bank has been authorized for Kenya as part of the Fiscal Sustainability and Inclusive Green Growth Development Programme Operation (DPO).
Kenya will receive the money after asking the World Bank to increase it by 33% as a result of the tighter global financing conditions, which have caused it to postpone a planned Eurobond sale that was supposed to take place in the current fiscal year.
The new Ksh138.45 billion loan will be split equally between the International Bank for Reconstruction and Development (IBRD), which, unlike the International Development Association (IDA), targets low-cost financing to low-income economies, and the World Bank’s International Development Association (IDA) provides financing with some concessions.
With a variable interest rate set at 85.0 basis points above the Secured Overnight Financing Rate, which is currently at 5%, the IBRD portion of the loan has an 18.5-year maturity duration.
According to the World Bank, as a condition of receiving the most recent loan, the Kenyan government agreed to deepen budget consolidation and implement responsible debt management measures.
In order to strengthen its battered financial position and support the shilling exchange rate, which has dropped to a record low – above Ksh130 against the US dollar, Kenya’s National Treasury had earlier requested $1.9 billion in emergency funding from the Bretton Woods institutions and a group of foreign commercial banks.
. The funding, which is anticipated within the next eight weeks, is intended to support foreign exchange reserves, which have also fallen below the legal requirement of four months’ worth of import coverage, and to ease a biting dollar shortage that has put businesses that rely on the greenback into an operational crisis.
The funding, which is anticipated within the next eight weeks, is intended to support foreign exchange reserves, which have also fallen below the legal requirement of four months’ worth of import coverage, and to ease a biting dollar shortage that has put businesses that rely on the greenback into an operational crisis.
Director of debt management at the National Treasury Haron Sirma explained that the new loans will consist of $600 million from a syndicate of foreign commercial banks in June, $300 million from the International Monetary Fund (IMF), and $1 billion from the World Bank, which is anticipated in May.
The four commercial banks are Citibank, Standard Chartered, Stanbic, and RMB Holdings Ltd., formerly Rand Merchant Bank Holdings, of South Africa.
