(MENAFN- The Peninsula) Bloomberg
The World Bank approved a $1 billion loan to Kenya to support the East African nation's economy.
The credit is being provided under the bank's Development Policy Financing program, which seeks to enhance growth and improve governance. The debt adds to increased funding announced by the International Monetary Fund last week.
The loan will cover items including fiscal consolidation and improving agriculture productivity, Aghassi Mkrtchyan, a World Bank economist for Kenya, said at a virtual briefing on Tuesday.
Kenya's budget has been under pressure from shortfalls in revenue collection and challenging financing conditions brought about by rising global interest rates. The government is targeting narrowing its budget deficit to 4.1% of gross domestic product in the fiscal year that begins July 1, from an estimated 5.7% in the current year, driven by revenue-mobilization measures.
Kenya's central bank forecasts the nation's economy to expand 5.8% this year, compared with 4.8% in 2022. Growth has been largely driven by the public sector spending on infrastructure, resulting in increasing debt vulnerabilities: the nation spends more than half of its tax revenue on servicing debt.
It is the fifth time that Kenya is tapping the facility, bringing cumulative borrowing under the development policy program to $4.25 billion.
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