The World Bank has granted Kenya Ksh75 billion for budgetary support even as experts warn over the country’s rising debt and its ability to service the loans with a big chunk of its revenues being lost to corruption.
In a statement on Wednesday, the World Bank said it has lend the money to support the government’s Big Four agenda.
“Reforms supported by the facility include better targeting of subsidies for agricultural inputs to reach the intended beneficiaries (using e-vouchers and biometric digital identification); reducing inefficiencies and leakages in the procurement and marketing of fertiliser; and establishing a warehouse receipt system and a commodities exchange to help farmers get easier access to credit and to reduce post-harvest losses,” the World Bank said in a statement.
The lender noted that the loan will help support the government’s digitisation programs to improve service delivery to citizens.
“The facility will enhance service delivery by the government to its citizens and reduce the need for face-to-face interactions and corruption opportunities, ” the statement read in part.
The government requested for the loan in March.
According to a letter written by President Uhuru Kenyatta and Treasury CS Henry Rotich, the loan is set to top up the 2019/2020 budget on the government’s Big Four Agenda which prioritizes food security, affordable housing, universal health coverage, and manufacturing.
Financial analysts have criticized the government’s excessive borrowing.
According to Central Bank of Kenya (CBK) governor Dr Patrick Njoroge, Kenya’s borrowing headroom is shrinking and it is time to restrategise her appetite for loans as it could affect the country’s growth.
“It is important to say that the moment for dealing with debt reorganization, looking at debt and itself reorganizing it,…that moment has come,” said Njoroge.
The government through treasury CS Henry Rotich has been insisting that the government is within the limits of public borrowing, and that there is no risk involved.
Recently, the government sealed a $2.1 billion (Ksh210 billion) Eurobond from the United States and the United Kingdom, days after Kenya was allegedly denied a loan from China.
The Eurobond will be repaid in two tranches of 7-year and 12-year tenors, according to information from the Treasury.
The country’s debt has hit Ksh.5.5 trillion, which represents a debt service ratio of 33.4% instead of the recommended global average of 30%.