Kenya's National Treasury is gearing up to receive a significant injection of funds from international allies to bolster its development initiatives for the 2024/25 financial year.
Fourteen countries have pledged a total of Ksh60 billion, marking a Ksh6 billion decrease from the previous fiscal year's support. Despite the reduction, this funding remains crucial for Kenya's ambitious development plans.
The National Treasury will not only benefit from loans but also from substantial grants aimed at facilitating various development projects across the country.
In total, grants amounting to Ksh5.5 billion will be provided, complementing the loan package and easing the financial burden on the government.
Several countries have stepped up as significant contributors to Kenya's financial pool. Japan stands out as the largest lender, committing Ksh14 million in loans and an additional Ksh353 million in grants.
France follows closely, offering Ksh11.7 billion in loans and Ksh828 million in grants. Germany, another key ally, will provide Ksh9 billion in loans and nearly Ksh3 billion in grants. China, which holds a substantial portion of Kenya's foreign debt, has pledged Ksh7.3 billion in loans but will not provide any grants this year.
Other countries have also shown their support for Kenya’s development agenda. Italy is set to contribute Ksh2 billion, while Saudi Arabia will provide Ksh1.2 billion.
Israel and Poland are each offering Ksh1 billion, and Kuwait is committing Ksh919 million. These contributions, while smaller than those of the leading donors, are still vital for the overall financial strategy.
Scandinavian countries, known for their focus on development aid, are significant partners for Kenya. Finland will extend Ksh970 million in loans and Ksh500 million in grants.
Denmark and Sweden will provide grants of Ksh100 million and Ksh60 million, respectively. These grants are particularly valuable as they do not require repayment, thereby easing the financial strain on Kenya.
The United States, through its development agency USAID, will contribute a grant of Ksh231 million. This funding will support various US-sponsored projects aimed at promoting sustainable development and economic growth in Kenya.
In addition to bilateral aid, Kenya will borrow an extra Ksh53 billion from international financial institutions such as the World Bank, the African Union, and the European Investment Bank.
These loans are crucial for financing large-scale infrastructure and development projects that are beyond the scope of bilateral aid.
For the 2024/25 financial year, Kenya aims to secure a total of Ksh113 billion in external borrowing and an additional Ksh31 billion in grants.
This combined financial package is expected to play a pivotal role in the country’s development agenda, enabling the government to fund various projects and initiatives critical for economic growth and social development.
The anticipated external funding comes in the wake of significant domestic policy changes. President William Ruto recently decided to forego Ksh346 billion that was supposed to be raised through the Finance Bill 2024.
The funds will be allocated to various sectors, including infrastructure, health, education, and agriculture. These sectors are critical for Kenya’s long-term development goals and are expected to have a transformative impact on the lives of Kenyan citizens.
A significant portion of the funding will be directed towards infrastructure projects, including roads, bridges, and public transportation systems.
Improved infrastructure is essential for facilitating trade, enhancing connectivity, and supporting economic activities across the country.
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