The World Bank’s Development Policy Operations (DPO) facility is set to provide additional resources to Kenya, amounting to $1 billion (Ksh 129 billion) in the 2022–23 fiscal year.
The loan awaits the approval of the World Bank’s board, with its disbursement expected before the end of the current fiscal year.
In 2021, Kenya received a KSh80.9 billion ($750 million) loan from the lender to support its budget and help the economy recover from the effects of the Covid-19 pandemic.
The loan attracts an average interest rate of 3.1% and has a 30-year repayment period preceded by a grace period of five years.
Kenya’s public debt
Kenya’s public debt stood at Kshs 8.7 trillion as of October 2022, an increase of 8.7% from Kshs 8.0 trillion in the same period in 2021.
The debt represents 62.3% of the GDP, 12.3% above the IMF threshold for developing countries. The domestic debt stock stood at 31.2% of the GDP, while the external debt stock was within a similar range at 31.1%.
According to the FY’2022/23 Supplementary Budget, the fiscal deficit is expected to decline to 5.7% of GDP from initial estimates of 6.2%.
“Despite the drop, we expect the government to borrow aggressively from domestic and foreign markets as it aims to plug in the fiscal deficit and ensure servicing of debt maturities with debt servicing to revenue coming in at 55.0% as of January 2023,” Says Cytonn Investments in its Kenya Economic Update: 2023.
“Additionally, the USD 2.0 billion Eurobond maturing in 2024 is also expected to increase the need for borrowing for debt refinancing.
In terms of domestic debt, the banking institutions continue to hold the highest percentage at 46.7% as of 24th February 2023.”
Kenya Economy Recovering But More Can Be Done: Cytonn Investments