The loan was initiated before the pandemic and is the second ever such direct lending for the budget from the World Bank. The first direct lending was processed last year.
“Its approval is timely, since it will help fill the financing gap generated by the severe, ongoing shock to Kenya’s economy,” the World Bank said in a statement.The budget deficit has swollen to 8.2% of GDP in the financial year to the end of June, from an initial forecast of under 7%, mainly due to reduced tax collection and lost revenue from VAT and income tax cuts” Yatani said.
The CS also wrote on twitter that world-bank-group does not provide budget support to countries with a weak macro framework.
The terms of the loan were not given a senior official at the finance ministry told said in january that the loan would be “fairly priced”. It comes only two weeks after the IMF approved $739 million in emergency financing, a move which has greatly helped the shilling currency wrestle foreign currencies.