Kenya’s negotiation with World Bank for $750mln loan continues

Kenya is negotiating with the international financial institution, World Bank for a gigantic amount of USD 750 million loan for budgetary support, documents on the proposed funding posted on the lender's website showed on May 28.

Kenya has several development funding programmes, worth billions of dollars, with the Washington-based lender, but the funding bypasses the Treasury and is usually channelled straight into the projects.

If the USD 750 million loan gets approved, it will be the first time in years the World Bank is putting cash straight into the Treasury to be used at the discretion of the government, said a source with knowledge of the issue.

The loan, which comes under the bank's so-called development policy financing, is designed to support the government's policy and institutional reforms and help make economic growth more inclusive. However, the global international financial institution declined to comment as the loan has not been approved by its board.

Officials at the ministry of finance did not immediately respond to Reuters' request for comments. Kenya raised USD 2.1 billion in a sovereign bond this month, but some critics have expressed concerns over the country's growing debt burden.

There has been a jump in government borrowing since Kenya's President Uhuru Kenyatta came to power in 2013 – a rise that some politicians and economists say is saddling future generations with too much debt.

Kenya's public debt as a percentage of gross domestic product (GDP) has increased to 55 percent from 42 percent when Uhuru Kenyatta took over. The government of Kenya has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.

Finance Minister, Henry Rotich told Reuters earlier this month that he was aiming to bring down debt servicing costs in the next few years to 12-16 percent.

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