The World Bank has suspended the disbursement of a $750 million (sh96.9 billion) loan to Kenya, citing the need for additional fiscal and structural reforms to ensure the country’s debt remains sustainable.
According to Treasury Cabinet Secretary John Mbadi, the delay stems from a debt sustainability review conducted by the World Bank, which assessed Kenya’s fiscal position before releasing the funds.
“The disbursement has been delayed because the World Bank team needed to carry out a debt sustainability assessment to ensure Kenya’s fiscal health,” Mbadi said, adding that discussions are ongoing to agree on further measures to support medium-term fiscal consolidation.
The World Bank has previously encouraged Kenya to implement new revenue-raising measures including possible increases in excise duties and consumption taxes though the specific products or rates under review have not been disclosed.
The delay follows earlier setbacks linked to Kenya’s failure to pass key legislative reforms required under the Development Policy Operations (DPO) programme.
These included the Conflict of Interest Bill and the Social Protection Bill, both viewed as critical to enhancing governance and curbing corruption.
“Development policy operations are contingent on the completion of prior actions and a sound macroeconomic and fiscal policy framework,” said Qimiao Fan, the World Bank Director for Kenya, Rwanda, Somalia, and Uganda.
He added that the release of the funds will depend on the government’s ability to fulfill its reform commitments.
“We are continuing to prepare the second operation, and the timing of its presentation to our board depends on the government fulfilling the agreed prior actions and maintaining a sound macroeconomic framework,” Fan noted.
Kenya had been expecting the $750 million disbursement in July 2025, following President William Ruto’s signing of the Conflict of Interest Bill into law on July 30 a key condition for the loan’s release.
The legislation aims to consolidate and strengthen existing laws on conflicts of interest, requiring public officers to declare assets, income, and liabilities, and to recuse themselves from decisions where personal interests may interfere with public duties.
“The Bill provides a framework for managing conflicts of interest in public service and introduces measures to ensure compliance and accountability,” reads part of the law.
The Treasury had factored the World Bank funds into the current financial year’s budget, meaning the delay could widen Kenya’s budget deficit and force the government to consider tax hikes or spending cuts to bridge the gap.
Last year, Kenya received $1.2 billion (sh155 billion) under the same DPO framework after meeting a set of reform milestones.
The current tranche was meant to continue those efforts, focusing on consolidating public finances under a single Treasury account and automating government procurement systems to curb corruption and collusion in state contracts.
However, the postponement of the disbursement has already strained several ministries, with Treasury officials warning of potential service disruptions and salary delays.
“The World Bank funding was delayed because some of the required legislation particularly the Conflict of Interest Bill took longer to pass. Once it was approved, there wasn’t enough time to submit it to the World Bank board for consideration,” Mbadi said in June.
The government now faces renewed pressure to implement comprehensive fiscal and governance reforms to unlock the funds and stabilize its economic outlook amid growing concerns over public debt and declining revenue performance.
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