The World Bank has stated that additional budget support to Kenya will only proceed once the East African nation fulfills its agreed economic reform commitments and maintains a sound macro-fiscal framework.
In response to inquiries the multilateral lender confirmed that the next phase of development policy operation funding remains contingent on the Kenyan authorities implementing prior actions outlined under the program.
“Funding will proceed when all prior actions are met by the authorities conditional on maintaining an adequate macro-fiscal policy framework,” a World Bank spokesperson said via email.
Kenya secured $1.2 billion in budgetary support from the World Bank in 2023 and committed to pursue fiscal consolidation including the adoption of a new debt anchor set at 55 percent of gross domestic product by 2029.
The country is currently in negotiations for an additional $750 million in support according to Treasury Secretary John Mbadi.
The World Bank, however, noted that a final figure has not yet been determined and emphasized that financing remains conditional.
Key reform areas identified under the program include the rollout of an electronic procurement system the consolidation of government funds into a single treasury account at the Central Bank of Kenya and strengthened anti-corruption measures.
Other required reforms involve social integration of refugees improved support for vulnerable households harmonization of business licensing frameworks and expansion of Nairobi’s commuter rail system to enhance urban mobility.
Kenya’s commitment to these reforms is seen as critical to restoring fiscal sustainability and improving investor confidence amid a challenging economic backdrop.
The World Bank’s conditional stance comes weeks after Kenya opted to end its ongoing program with the International Monetary Fund under a four-year arrangement which cost the country access to approximately $850 million in financing.
The termination of the IMF assessment has heightened scrutiny over Kenya’s reform trajectory with credit rating agencies Fitch and S&P Global warning that the move could jeopardize other external funding avenues.
Kenya’s public debt remains a concern as the country navigates growing fiscal pressures, rising interest rates and limited external borrowing options.
With the World Bank now tying further disbursements to reform compliance, the onus is on Kenyan authorities to demonstrate tangible progress on policy and governance commitments.
Failure to meet reform targets could further constrain Kenya’s access to multilateral funding and potentially impact its credit outlook in the near term.
The Treasury has yet to provide an updated timeline for meeting the World Bank’s conditions or for securing the additional $750 million in funding.
