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The World Bank has approved a $1 billion loan for Kenya to support its budget.
The COVID-19 pandemic has caused the government’s budget deficit to swell to 8.2% of GDP in the financial year to the end of June, from an initial forecast of under 7%, mainly due to reduced tax collection and foregone revenue in the form of VAT and income tax cuts.
The World Bank expects growth to fall to 1.5% this year from 5.4% last year due to the pandemic, but the government has a higher forecast of 2.5-3%.
The loan comes two weeks after the IMF approved $739 million in emergency financing to help Kenya respond to the economic shock caused by the pandemic, a move which has supported the shilling currency.