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The World Bank has indicated that further budget support for Kenya will only be granted if the country meets its agreed-upon economic reform commitments and maintains a solid macro-fiscal framework. In response to questions, the multilateral lender clarified that the next phase of development policy operation funding is contingent upon the Kenyan authorities completing the necessary prior actions outlined in the program. A World Bank spokesperson stated via email, “Funding will proceed when all prior actions are met, contingent on maintaining an adequate macro-fiscal policy framework.”
In 2023, Kenya received USD 1.2 billion in budget support from the World Bank and pledged to implement fiscal consolidation, including establishing a new debt ceiling of 55 percent of GDP by 2029. The country is currently negotiating an additional USD 750 million in support, according to Treasury Secretary John Mbadi. However, the World Bank noted that the final amount has not yet been decided and emphasized that financing is conditional.
Key reform areas highlighted in the program include implementing an electronic procurement system, consolidating government funds into a single treasury account at the Central Bank of Kenya, and enhancing anti-corruption measures. Other required reforms encompass the social integration of refugees, improved support for vulnerable households, harmonising business licensing frameworks, and expanding Nairobi’s commuter rail system to boost urban mobility.
Kenya’s commitment to these reforms is deemed essential for restoring fiscal sustainability and enhancing investor confidence amid a challenging economic environment. The World Bank’s conditional stance follows Kenya’s decision to end its ongoing program with the International Monetary Fund (IMF), which had provided the country with approximately USD 850 million in financing under a four-year arrangement. This termination has raised concerns about Kenya’s reform path, with credit rating agencies Fitch and S&P Global warning that it could jeopardise other external funding options.
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Kenya’s public debt is a significant concern as the country faces increasing fiscal pressures, rising interest rates, and limited external borrowing possibilities. With the World Bank now linking further disbursements to compliance with reform measures, the responsibility falls on Kenyan authorities to show meaningful progress in policy and governance commitments. Failure to achieve reform targets could further limit Kenya’s access to multilateral funding and negatively affect its credit outlook shortly. The Treasury has yet to provide an updated timeline for fulfilling the World Bank’s conditions or for securing the additional USD 750 million in funding.
