Rédaction Africa Links 24 with Daily Nation
Published on 2024-02-08 05:00:00
The Central Bank of Kenya (CBK) Governor Kamau Thugge recently announced that the World Bank has allocated Sh240.4 billion ($1.5 billion) in new funding to Kenya for disbursement between March and April of the current financial year. This funding is part of extended support from the multilateral lender, which has traditionally provided between Sh120.2 billion ($750 million) and Sh160.3 billion ($1 billion) a year through its Development Policy Operations (DPO) facility in recent years.
The new funding is expected to ease concerns about Kenya’s ability to meet the maturity of its debut Sh320.6 billion ($2 billion) Eurobond in June by ensuring the availability of hard currency. In addition to support from the World Bank, Kenya has received recent debt inflows from other lenders such as the International Monetary Fund (IMF) and the Trade and Development Bank (TDB).
The disbursements from the World Bank are anticipated to contribute to exchange rate stability and bolster the country’s foreign currency reserves, offsetting the upcoming Eurobond maturity. In addition, the World Bank has signaled its commitment to providing additional budget and project financing to Kenya over the next three years, demonstrating its support for the country’s growth.
The funding is split between the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD), with $3 billion (Sh480.9 billion) coming from the IDA and $1.5 billion (Sh240.4 billion) from the IBRD. Over the next three fiscal years, the IDA and IBRD are expected to provide an estimated $4.5 billion, including fast-disbursing operations, implying a total financing package of Sh1.9 trillion ($12 billion) over this period.
The World Bank has also highlighted its commitment to supporting Kenya’s growth into an upper-middle-income country over the medium term. The IBRD provides funding to middle-income and creditworthy low-income countries, while the IDA offers interest-free loans and grants to the poorest countries.
In addition to the World Bank’s support, Kenya has access to concessional financing totaling Sh320.6 billion ($2 billion) each year, with combined commitments from the IDA and IBRD standing at Sh1.3 trillion ($8.3 billion), and Sh705.4 billion ($4.4 billion) available for disbursement. The World Bank’s private sector financing arm, the International Finance Corporation, and the Multilateral Investment Guarantee Agency are also engaged in financing and guarantees covering various sectors in Kenya, such as energy, transport, and tourism.
Looking ahead, Kenya may consider accessing the international capital markets to issue its first Eurobond in over two years to address financing gaps, including the settlement of the Eurobond maturity. Dr. Thugge expressed confidence in Kenya’s ability to access international capital markets, citing examples of other African countries that have successfully accessed these markets.
Overall, the allocation of new funding from the World Bank is expected to provide critical support to Kenya’s economy and contribute to its ongoing development efforts. With a focus on exchange rate stability, foreign currency reserves, and long-term growth, the funding represents a significant step in advancing Kenya’s economic objectives.
Read the original article on Daily Nation
