World Bank Sets Conditions for Kenya to Access Ksh96.9B Budget Support Ahead of June Deadline

World Bank Sets Conditions for Kenya to Access Ksh96.9B Budget Support Ahead of June Deadline

Kenya is racing against time to secure a Ksh96.9 billion budget support loan from the World Bank, with the lender outlining strict conditions that must be met before the June 30 deadline.

The funding, offered under the Development Policy Operations (DPO) programme, is expected to be channelled directly to the National Treasury to support recurrent expenditure, including salaries and essential government services in the upcoming fiscal year.

However, the global lender has made it clear that disbursement of the funds is conditional upon Kenya implementing three key regulatory measures within the stipulated timeline.

Among the requirements is the establishment of clear guidelines on how beneficiaries of government cash transfer programmes—targeting orphans, the elderly, and persons with disabilities—are identified and verified. The World Bank has emphasised the need for transparency and accountability in the allocation of social protection funds.

Additionally, Kenya is required to develop regulations governing the issuance of sustainability-linked bonds (SLBs), a financing instrument tied to environmental performance targets. The move is part of a broader push to align the country’s fiscal policies with climate and sustainability goals.

A third condition involves strengthening legal frameworks to support environmental conservation, including enforcing a policy aimed at increasing Kenya’s national tree cover to at least 30 per cent by 2032 under the Forest Conservation and Management Act.

The conditions come at a time when Kenya is seeking additional financial support to cushion its economy against external shocks, including fuel supply disruptions linked to ongoing geopolitical tensions in the Middle East.

“The funds will only be released once the agreed policy and regulatory actions are fully implemented,” the World Bank indicated, underscoring the urgency of compliance.

With less than two months remaining, attention has now shifted to Parliament and the Executive, both of which must act swiftly to finalise the required legal and policy frameworks. Lawmakers are expected to prioritise amendments related to forest conservation laws, while government agencies work to publish the outstanding regulations.

According to the National Treasury, at least two of the conditions are on track to be fulfilled by the end of May, with legislative processes expected to be concluded by early May to allow sufficient time for implementation.

“We are working within tight timelines to ensure that all conditions are met and the funds are unlocked,” a Treasury official familiar with the process stated.

Failure to meet the deadline could see Kenya miss out on the critical funding at a time when public finances are under increasing strain. The government is currently preparing a budget estimated at Ksh4.738 trillion, with the national government’s expenditure ceiling set at approximately Ksh2.878 trillion.

The country is also grappling with a budget deficit of about Ksh1.22 trillion—equivalent to 6.4 per cent of GDP—while domestic borrowing has already approached the Ksh1 trillion mark, raising concerns over fiscal sustainability.

Before the funds can be released, Kenya will also require a clearance letter from the International Monetary Fund, which serves as an additional safeguard to ensure that macroeconomic policies remain on track.

Once approved, the loan will be deposited into the government’s consolidated account and used to support day-to-day operations, offering temporary relief to the country’s strained finances.

Analysts warn that delays in meeting the World Bank’s conditions could complicate Kenya’s fiscal planning and heighten pressure on domestic revenue sources.

As the June deadline draws closer, the government faces a delicate balancing act—accelerating reforms while maintaining legislative and administrative coherence—to unlock much-needed funding in a challenging economic environment.

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World Bank Sets Conditions for Kenya to Access Ksh96.9B Budget Support Ahead of June Deadline