The World Bank’s board is expected to vote on June 26 on a proposed KSh 97.11 billion (US$750 million) loan to Kenya. The financing forms part of the second phase of a three-part Development Policy Financing (DPF) programme aimed at improving fiscal stability, enhancing competitiveness in labour and product markets, and advancing climate resilience initiatives.
The decision follows an earlier suspension of disbursements by the World Bank after Kenya fell behind on implementing key legislative and policy reforms linked to the programme.
However, the government has since fulfilled the outstanding requirements highlighted during the April 2026 IMF and World Bank Spring Meetings. These include the enactment of the Conflict of Interest Act, the establishment of a framework for issuing sustainability-linked bonds, and regulations to operationalise the Social Protection Act through the Enhanced Single Registry.
Separately, Kenya is also seeking approximately KSh 77.5 billion (US$600 million) in Rapid Response Support to cushion the economy against rising oil prices triggered by conflict in the Middle East. This request is being considered independently of the DPF programme.
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Speaking in Nairobi on June 10 after a Monetary Policy Committee meeting, Central Bank Governor Kamau Thugge said discussions with the World Bank were at an advanced stage and expressed confidence that the proposal would soon be presented to the board. He noted that no funds had been released at that point.
Kenya’s debt burden remains a concern. Public debt stood at 68.8 per cent of GDP in the 2024/25 financial year, down from a peak of 73.5 per cent in 2022/23 but significantly higher than the 35.7 per cent recorded in 2009/10. Meanwhile, the fiscal deficit widened to 5.9 per cent of GDP, surpassing the original target of 4.3 per cent due largely to weaker-than-expected revenue collection.
The country’s engagement with the IMF also remains unresolved. Kenya’s US$2.4 billion Extended Credit Facility/Extended Fund Facility programme and the US$551.4 million Resilience and Sustainability Facility expired by mutual agreement in March 2025 following fiscal slippages and delays in meeting reform targets. Approximately US$850 million remained undisbursed, while discussions on a new programme continue and the 2024/25 Article IV consultation is still pending.
The proposed loan follows a KSh 155.38 billion (US$1.2 billion) DPF approved in May 2024, which introduced reforms such as the Treasury Single Account and measures to streamline the public wage bill. The new operation seeks to deepen reforms in public finance management, economic competitiveness and climate resilience, including investments in green transport and forest conservation.
Despite the progress, the World Bank has classified the programme’s residual risk as substantial, citing ongoing macroeconomic pressures and the political challenges associated with fiscal consolidation as Kenya moves closer to the 2027 General Election.
