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Kenya expects Sh97bn World Bank loan in early June
Cabinet Secretary John Mbadi (left centre) and other Treasury officials meet with Ndiamé Diop (facing Mbadi), the new World Bank VP for Eastern & Southern Africa, who will be based in Nairobi, on the sidelines of the IMF/World Bank Spring Meetings in Washington DC.
Kenya now expects to receive the full Sh97.08 billion ($750 million) Development Policy Operation (DPO) loan from the World Bank before the end of June 2025.
National Treasury Cabinet Secretary John Mbadi said that gaps that may have hindered access to the loan had been resolved after President William Ruto referred a watered-down Conflict of Interest Bill 2025 back to the National Assembly for review.
“We have largely met the prior conditions and the ones that haven’t been met we are working to ensure are resolved by the second week of May. We have met the director for our region and have been assured that by the third week of May, we could have the board meeting,” he told Business Daily in an interview on the sidelines of the IMF/World Bank Spring Meetings in Washington DC.
“Initially they were talking of the board meeting happening in June. This means that we may access the Sh97.08 billion ($750 million) in early June,” he added.
The Conflict of Interest Bill 2025 is part of the conditions that the World Bank had placed on Kenya for further lending through the DPO facility. The DPO is used by the multilateral lender to support countries in implementing policy and institutional reforms aimed at achieving economic growth and poverty reduction.
The DPOs offer financial assistance in exchange for specific policy changes designed to improve areas like public finance, market efficiency and climate action.
Central Bank of Kenya Governor Kamau Thugge confirmed that all is now clear for the DPO disbursements.
“We have held discussions with the World Bank and there are broadly two elements to the discussion with the first one being their assessment of Kenya’s macroeconomic situation with the support of the International Monetary Fund,” he said.
“The second is the implementation of prior actions particularly the Conflict of Interest Bill of 2025 and that has been resolved,” Dr Thugge, told the Business Daily on the sidelines of the Spring Meetings in Washington DC.
Mr Mbadi, on April 16, 2025, told the National Assembly that the DPO funding had been revised to Sh77.6 billion, representing a 20.1 percent cut in the amount-- a move that threatened to squeeze Kenya’s already tight external financing landscape given the collapse of the programme with the International Monetary Fund (IMF).
The National Treasury had lowered its expectation on the World Bank DPO VII disbursement due to the delay experienced in the passage of the Conflict of Interest Bill in Parliament and concerns that the final version had watered down provisions aimed at tightening the noose on corrupt public officers.
“While the Bill as presented largely addresses the subject of conflict of interest, the President notes the need for further improvement to strengthen its provisions on transparency and enforcement to align it with the constitutional values of integrity and good governance,” the memo from the President referring the Bill back to the National Assembly states.
The government, however, maintains that alignment with the IMF and progress towards a successor programme will be crucial to ensuring that the World Bank funds are released in time before the end for the current financial year in June.
“National Treasury is working very hard to ensure that the prior actions are met and then as we work with the International Monetary Fund in terms of the next steps for the successor programme the macroeconomic elements attached to the DPO could also be addressed,” Dr Thugge said.
Beyond its attachment to the World Bank’s Sh97.08 billion loan, the Conflict of Interest Bill 2025 is one of the pieces of legislation proposed by the State to strengthen Kenya’s case to be removed from the Financial Action Taskforce’s grey list due to loopholes in the fight against money laundering and illicit financial flows.
On April 4, 2025, National Assembly Majority Leader Kimani Ichung’wah, tabled the Virtual Assets Service Providers Bill 2025 which seeks to combat money laundering through the use of virtual assets, including cryptocurrencies, whose use has gained traction in the recent past.
Besides, the DPO loan, Kenya expects to receive $265 million (Sh34.4 billion) from the African Development Bank and $500 million (Sh64.8 billion) from the United Arab Emirates.
The new loans are expected to augment domestic borrowing to finance the government’s budget deficit of Sh887.2 billion for the fiscal year ending June 30, 2025.
The deficit is to be funded through net domestic borrowing of Sh605.7 billion and external borrowing of Sh281.5 billion, as per the revised numbers contained in the second supplementary budget of the 2024/25 fiscal year.
