Kenya engages World Bank for $750 mln loan for budget support

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Kenyan shilling banknotes and coins sit arranged at a market stall in Mombasa, Kenya, on Thursday, Nov. 23, 2017. The country’s Treasury has already cut this year’s growth target to 5 percent from 5.9 percent as the protracted election furor damped investment and a drought curbed farm output. Photographer: Luis Tato/Bloomberg

NAIROBI (Reuters) – Kenya is negotiating with the World Bank for a $750 million loan for budgetary support, documents on the proposed funding posted on the lender’s website showed on Tuesday.

The East African nation has multiple 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 $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.

The World Bank 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 $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 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% from 42% when Kenyatta took over. The government 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%.

Reporting by Duncan Miriri, Editing by Sherry Jacob-Phillips

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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