Kenya is set to miss out, at least in the short term, on emergency financing it had sought from the World Bank to cushion the economy against the effects of the ongoing conflict in the Middle East.
According to Business Daily, the World Bank is instead expected to consider an earlier request by Kenya for a Sh97.1 billion loan under its Development Policy Operation (DPO) programme. The amount of emergency funding sought by the government has not been disclosed.
Disclosures from the World Bank indicate that its Board of Executive Directors is scheduled to consider Kenya’s Sh97.1 billion Development Policy Operation before the end of this month.
The development comes amid growing concerns over the economic impact of rising global oil prices and supply chain disruptions linked to tensions in the Middle East, which have increased fuel costs and inflationary pressures in many countries, including Kenya.
Last week, Central Bank of Kenya Governor Kamau Thugge said the government remained optimistic that the World Bank would approve both the Development Policy Operation loan and the emergency financing package.
“We are still in the process of discussing with the World Bank on the DPO, and we hope that it will go to the board for discussion fairly shortly. So far there haven’t been any disbursements regarding the emergency financing, but it is an ongoing discussion, and we hope that this will be finalized quite shortly,” said Thugge.
The Development Policy Operation is a fast-disbursing financing instrument designed to help countries address actual or anticipated development financing needs. The facility supports economic reforms aimed at promoting sustainable and inclusive growth, reducing poverty and strengthening resilience to economic shocks.
The programme also supports policy and institutional reforms in areas such as public financial management, investment climate improvement, service delivery, economic diversification and climate action.
If approved, the Sh97.1 billion facility is expected to provide budgetary support to the government at a time when Kenya is facing increased fiscal pressures and rising expenditure demands.
The delay in securing emergency financing could leave the government relying on existing fiscal measures as it seeks to mitigate the economic effects of volatility in global energy markets and broader geopolitical uncertainties.
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