The World Bank (WB) will delay releasing $750 million (Sh96.9 billion) to Kenya, after the country failed to pass a Bill to curb graft amongst public officers, forcing the Treasury into a third budget review in the current financial year ending this month.
Treasury Cabinet Secretary John Mbadi on Wednesday said the earliest disbursement date for the WB cash is July, with the government now at a loss on how to plug the budget deficit of Sh96 billion. The money was expected to be disbursed this month.
The Bretton Woods lender had singled out passage of the Conflict of Interest Bill, 2023 into law, as a condition for release of the funds.
But President William Ruto declined to sign it into law, citing 12 clauses in the Bill that had been watered down.
“The WB funding seems to be going to July because some of the legislations (Conflict of Interest Bill) that was precedent to the release of these funds were delayed,” Mr Mbadi said.
“The Conflict of Interest Bill was a key Bill for the WB to give us the funding and when it was unlocked there was no time to take it to the WB board for approval. We are going to June 30 with a Sh97 billion hole that, as the CS, I did not prepare for.”
Dr Ruto raised reservations with the Bill on a range of issues, including instances that qualify as conflict of interest for a public servant, a clause that allowed public servants to accept gifts while on official duty and another one that sought to compel all State offices to keep a register of all gifts given to its officers.
Mounting debt payments especially to China, coupled with near stagnant revenue collections have pushed Kenya to increasingly rely on budget support programmes mainly with the International Monetary Fund (IMF) and now WB.
Albert Mwenda, the Director General Budget, Fiscal and Economic Affairs at the National Treasury last month said that Treasury was finalising the third supplementary for tabling in Parliament.
Missing out on WB funding has been worsened by the number of State offices already depleting their budgetary allocations two months to the end of the 2024/25 financial year.
Treasury disclosures showed that the State Department of Social Protection and Senior Citizens had overspent its Sh35.7 billion budget for salaries and other recurrent items by Sh2.4 billion as at end of April this year.
State House spent 98 percent of the Sh7.96 billion allocated for the same items in the same period, pushing Treasury to a third supplementary budget. Budget documents for the 2025/26 financial year show that Kenya will largely rely on World Bank for budget support until at least the end of the 2028/29 financial year.
Kenya expects to receive a total of Sh682 billion in equal tranches throughout the period, starting with a Sh170.5 billion in the year starting July 1, 2025.
The move to increasingly lean on the World Bank and other lenders like the African Development Bank (AfDB) came after the IMF prematurely discontinued its budget support.
Kenya failed to honor key conditions agreed with the IMF such as the restructuring of the Kenya Airways and a review of the fuel taxes, prompting the lender to withdraw its support which had come in handy notably since the Covid-19 pandemic economic fall-out.
“We did not conclude the 9th review with the IMF and so we lost $765 million going to budgetary support,” Mr Mbadi added.
