President William Ruto's administration plans to apply for its first World Bank credit a few days after the International Monetary Fund (IMF) agreed to complete disbursing a loan secured by the previous government.
Treasury CS, Prof Njunguna Ndung'u, on Thursday, November 10, stated that seeking a new loan was necessitated by economic shocks occasioned by severe drought and hunger.
“We will have an enhancement with the World Bank. It is one of the support areas for our recovery, and it is targeting some of the areas we are looking at, for instance, the hunger safety net,” Treasury CS Prof. Njuguna Ndung’u announced in a statement released on Thursday, November 10.
World Bank is one of Kenya’s largest lenders, with the country using the funds for development projects.
Although the amount being sought was not yet disclosed, Kenya will be seeking its fifth loan from World Bank in four years.
In 2019, the country borrowed a whooping Ksh396 billion from the world’s largest lending facility.
The loan, if approved, will be disbursed mid-next year to supplement the already agreed Ksh52 billion from IMF.
IMF on Tuesday, November 8, pledged to disburse the Ksh52 billion that was part of the Ksh255 billion sealed by former President Uhuru Kenyatta.
Ruto's administration was credited with meeting all conditions set for the loan, from cutting down expenditure, working towards reducing the wage bill and initiating plans to maximise profits from parastatals.
“There has been good progress on fiscal adjustments needed to address debt vulnerabilities, although pressures remain elevated," IMF stated.
Plans to apply for credit from World Bank surfaced hours after President Ruto pledged to cut down overdependence on loans.
“We must remove the fat from our budget. I will not be the president that will continue with the journey of taking our country to debt.
"It will be difficult, but we don’t have a choice," Ruto stated while addressing pensioners at an event in Nairobi on Friday, November 11.
On Thursday, September 29, Ruto directed the Treasury to cut down the national budget by Ksh300 billion. To that effect, Treasury banned government agencies and parastatals from conducting training and also curbed the disbursement of some allowances.
Kenya’s current public debt stands at Ksh8.5 trillion in both external and domestic debt, while the budget totals Ksh3 trillion.
