The National Treasury had factored in the World Bank funding in the current financial year, starting from July
World Bank loan suspension Kenya 2025 has triggered concern within government circles. The institution froze a Sh96.93 billion disbursement due to delays in passing key reforms. The most notable is the Conflict of Interest Bill, aimed at curbing graft among public officials.
Reform Commitments Stall as Senate Blocks Bill
Kenya had committed to several reforms under the World Bank’s Development Policy Operations (DPO) programme. These included passing the Conflict of Interest Bill, consolidating public finances into a single treasury account, and automating procurement systems.
The National Treasury had expected the World Bank funds in July. These funds were already included in the current fiscal year’s budget. However, Kenya did not factor in extra support from the IMF. This delay could force the government to borrow again or cut spending to cover the deficit.
World Bank Statement
The World Bank said funding will only proceed after Kenya meets all “prior actions.” These include laws and reforms under the DPO framework, which disbursed Sh155 billion in 2024.
“Development policy operations (DPOs) are conditional,” said Qimiao Fan, the World Bank director for Kenya, Rwanda, Somalia, and Uganda. “They depend on completing prior actions and maintaining sound fiscal and macroeconomic policy.”
He added: “We are still preparing the second operation. Its timing depends on the government fulfilling agreed reforms.”
Senate Rejection and Ruto’s Objections
Kenya’s Treasury had expected the release of funds after MPs passed an amended Conflict of Interest Bill. The law seeks to raise public transparency and fight corruption.
However, President William Ruto declined to sign it in June. He rejected 12 clauses, including one that allowed officials to accept gifts. He returned the Bill to Parliament with recommendations. MPs agreed, but the Senate rejected key revisions.
Senators removed clauses that banned public officers from bidding for state tenders. They also scrapped requirements for regular wealth declarations by officials, spouses, and children.
Graft, IMF Exit, and Budget Hole
Kenyan governors, ministers, and MPs have previously faced graft charges tied to inflated tenders. Ruto’s Cabinet had approved the Bill to stop state officers from using government contracts for personal gain.
Other unfulfilled reforms include transparency in public spending and better delivery of social protection.
The Treasury did not comment on the World Bank’s decision. But in early June, Treasury CS John Mbadi told Parliament: “The funds were pushed to July. The delay happened because critical laws weren’t ready. We are now facing a Sh97 billion shortfall I hadn’t anticipated.”
Despite the delay, Kenya still hopes to rely on World Bank loans. It targets Sh170.5 billion annually over the next four years—up from Sh129 billion last year.
World Bank loans are long-term and less demanding than IMF loans. In contrast, the IMF focuses on short-term stabilization and strict reforms. Kenya’s last IMF deal ended after it failed to meet 11 conditions, including reforming Kenya Airways and fuel levies.
As a result, the country missed Sh63.3 billion in IMF funding in the last fiscal year. Talks for a new IMF programme are ongoing.
