World Bank Assures Kenya’s Debt Sustainable If Properly Managed
The World Bank has stated that Kenya’s debt is sustainable if fiscal policies are improved and well-executed, even as the country continues to face high debt vulnerability.
World Bank Country Director for Kenya, Qimiao Fan, said during a joint Nation FM and NTV interview that the country’s debt trajectory matters more than the current numbers. Kenya’s debt-to-GDP ratio has dropped from over 70% to around 66–67%, but Fan warned that fiscal pressures remain severe.
“There’s nothing intrinsically wrong with debt,” Fan said. “The question is how you use that debt, whether it’s put to productive use that can help increase growth and create jobs.”
He noted that about a third of Kenya’s tax revenue goes toward interest payments. With over 86% of government spending consumed by interest, salaries, and pensions, little is left for development needs like infrastructure, healthcare, and education.
Fan stressed that debt sustainability is dynamic. “It’s the trajectory, where it’s going,” he said. “Are fiscal policies helping to gradually reduce the ratio to a sustainable level?”
The World Bank has provided Kenya with about $25 billion (Sh3.23 trillion) in loans, credits, and grants since 1964. Fan clarified that all financial terms are publicly available and that World Bank funding to Kenya is transparent.
He outlined three main types of support offered by the Bank:
- Investment Project Financing: For projects like school construction, healthcare facilities, roads, and energy infrastructure.
- Programme-for-Results (PforR): Loans linked to specific outcomes such as increased school enrollment or better education retention rates.
- Development Policy Operations (DPO): Also known as budget support, used to finance government policy reforms.
Fan emphasized that projects are selected in partnership with the Kenyan government based on national priorities, with the Bank bringing both technical and financial support.
While the decline in the debt ratio is a positive signal, Fan reiterated the importance of sustained reforms to boost economic resilience and inclusive growth.
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World Bank Assures Kenya’s Debt Sustainable If Properly Managed