Written By Lisa Murimi
The Government of Kenya is seeking Ksh769 billion from the World Bank to address a fiscal deficit in its 2024/2025 budget, following expenditure adjustments in its first supplementary estimates.
This fiscal gap, an increase from the initial estimate of Ksh 597 billion, represents 4.3% of Kenya’s GDP.
The National Treasury is anticipating World Bank approval for its seventh development policy operation (DPO7) loan of Ksh 97.5 billion (USD 755.8 million).
Treasury Cabinet Secretary John Mbadi indicated that reforms required for this funding are largely complete, except for the pending Uniform County Procedures Licensing Bill 2023 and the Conflict-of-Interest Bill 2023, which are currently in mediation between the Senate and the National Assembly.
In January 2024, Kenya successfully secured Ksh 193 billion (USD 1.5 billion) through the previous DPO6 loan.
With World Bank approval of DPO7 expected before the end of the financial year, the government is also pursuing new tax reforms under the Tax Laws Amendment Bill 2024 and the Business Laws (Amendment) Bill 2024 to expand its tax base and reduce the deficit.
While the government projects Ksh3 trillion in revenue (16.9% of GDP) for 2024/2025, its spending cuts of Ksh 111.2 billion signal continued fiscal challenges, drawing both domestic scrutiny and support for sustainable financial reform.
