World Bank approves 1 bln USD for Kenya's budget support-Xinhua

World Bank approves 1 bln USD for Kenya's budget support

Source: Xinhua| 2023-05-31 23:55:15|Editor: huaxia

NAIROBI, May 31 (Xinhua) -- The World Bank said it has approved a 1-billion-U.S.-dollar loan to Kenya for low-cost budget financing.

The World Bank said the loan, done under the Development Policy Operation (DPO), will support key policy and institutional reforms for Kenya's near-term objectives of fiscal consolidation as well as its long-term goal of green and inclusive growth.

World Bank Country Director for Kenya Keith Hansen said in a statement issued in the Kenyan capital Nairobi Tuesday evening that the government has shown its commitment to fiscal consolidation, which is key for reducing debt vulnerabilities and ensuring long-term growth sustainability.

"The government implemented measures to protect the livelihoods of the most vulnerable, including through lifeline electricity tariffs that guarantee access to low-cost electricity for vulnerable households, protecting social safety nets, and creating opportunities for the poor through the Financial Inclusion Fund," Hansen said.

The DPO supports a crucial set of initiatives to promote objective decision-making through the Conflict-of-Interest Bill, to streamline the state's orderly exit from commercial investments through amending the State-Owned Enterprises Privatization Act, and improve access to climate change information and mandate public consultations on the government's climate change initiatives.

The World Bank said Kenya's economy has demonstrated resilience to shocks but continues to face vast challenges including the lingering economic impacts of the COVID-19 pandemic, the global repercussions of the Russia and Ukraine conflict, increasingly frequent climate shocks, synchronous monetary tightening in advanced economies, and debt vulnerabilities.

It said the DPO will support Kenya to institute a raft of policy reforms that will target the creation of fiscal space in a sustainable and equitable manner, including revenue and expenditure measures to support fiscal consolidation, strengthening the debt management framework, and protecting pro-poor expenditures.

Aghassi Mkrtchyan, the senior economist for the World Bank in Kenya, said the government's reforms, supported by the DPO, will help achieve fiscal consolidation, which is essential for reducing the debt burden and related risks by safeguarding social spending while supporting much-needed revenue and expenditure measures.

"The operation combines these measures with important initiatives to improve productivity and exports of Kenya's agriculture sector, and governance reforms for more inclusive and green growth driven by private investments," Mkrtchyan said.

The Bank said the government's multi-sectoral reform program supported by the DPO stems from its long-term sustainable and inclusive growth agenda.