NAIROBI, Kenya – Kenya’s plans to shield consumers from soaring fuel prices have suffered a setback after the World Bank delayed the approval of a proposed Sh78 billion emergency loan, citing the need for a clearer spending framework from the government.
The financing, which the government applied for in April under the World Bank’s rapid response financing facility, was intended to help Kenya manage the economic impact of global geopolitical tensions that have pushed up the cost of fuel and fertiliser.
However, the Washington-based lender has requested additional details on how the funds will be spent before it can release the money.
According to the World Bank, the government must identify the specific emergency expenditures the facility will finance, effectively putting the funding on hold until the Treasury submits a comprehensive spending plan.
The delay comes as Kenya grapples with rising fuel costs that continue to squeeze households and businesses despite government efforts to ease the burden through tax relief measures on petroleum products.
Like many fuel-importing countries, Kenya remains vulnerable to global supply disruptions triggered by international conflicts, including tensions involving the United States, Israel and Iran.
The government had hoped the emergency financing would cushion the economy against higher import costs while limiting inflationary pressure.
The World Bank’s rapid response financing facility is designed to provide emergency support to countries facing crises such as armed conflicts, pandemics and natural disasters.
The proposed Sh78 billion package was expected to support critical interventions, including stabilising fuel supplies and easing the cost of key agricultural inputs such as fertiliser.
The latest development means the National Treasury must now provide a detailed breakdown of the planned expenditure before the lender can consider approving the funds.
The delay comes just weeks after the World Bank approved another Sh97 billion financing package for Kenya aimed at supporting governance reforms, strengthening public financial management, expanding social protection programmes and enhancing anti-corruption efforts.
Approved on June 29, the package comprises Sh44 billion from the International Bank for Reconstruction and Development (IBRD) and Sh53 billion in concessional financing from the International Development Association (IDA).
The World Bank said the funding would also support programmes designed to improve the livelihoods of refugees and host communities while helping Kenya strengthen governance, attract private investment and create jobs.