The World Bank has approved $1.2 bn, which includes $1.15bn in loans and credit and $50mn grant, to help Kenya address short-term fiscal pressures and strengthen climate action.
- •In addition to budget support, the new $1.2 billion Development Policy Operation (DPO) is meant to foster more competitive and inclusive product and labor markets, and strengthen climate action, among other long-term measures.
- •The approval comes with a call to the Kenyan government to promote export growth, enhance policy and institutional assessment and maintain the fiscal consolidation path to return to moderate risk of debt distress.
On climate, the DPO will support Kenya’s ambitions on green public transport, increasing forest cover, and leveraging climate finance, including through carbon credits and green and sustainability-linked bonds.
“The policy dialogue around this DPO has helped to strengthen the macroeconomic framework, sustain an ambitious fiscal consolidation path, and tighten monetary policy,” said Keith Hansen, World Bank Country Director for Kenya. “After tackling the immediate fiscal pressures, the focus can now shift to addressing the country’s longer-term challenges.”
The DPO is funded through a combination of financial instruments, including an International Bank for Reconstruction and Development loan of $850 million, an International Development Association (IDA) credit of $300 million, and a $50 million IDA grant from the Window for Host Communities and Refugees.
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