World Bank loan “to promote growth and reduce poverty”

The IMF loan, which had been approved in principle on Friday 28 July, was expected to open the door for additional loans from other lenders and, on Tuesday, the World Bank approved a US $150 million credit, also intended to support Kenya’s economic and public sector reform. The US $150 million loan, to be disbursed in three equal instalments, was the first credit to Kenya in three years (with the exception of an extraordinary El Nino emergency loan) and was intended to improve Kenyans’ living conditions “by promoting broad-based growth and poverty reduction”, according to a World Bank press release. It noted continuing efforts to fight corruption, ongoing privatisation, the declaration of HIV-AIDS as a national disaster and the implementation of strategies to deal with it, and efforts to improve public sector management. The first instalment of US $50 million was expected to be released by the Bank within days, with the other two instalments due in September and March 2001, “upon the government meeting specific performance targets in core reform areas.” These include reforms in economic governance (improved transparency and prudent spending), “right-sizing” of the civil service, privatisation and a shift in government expenditure towards priority poverty reduction areas, the statement added. The resumption of IMF and World Bank lending was greeted with considerable relief in government circles, given that economic growth had fallen to less that 2 percent per annum in the last three years, but was criticised by political opposition elements claiming that the government - dominated by the Kenya African National Union (KANU) party of President Daniel arap Moi - had failed to root out corruption, according to news reports and business analysts. However, the IMF had set strict performance standards and conditionalities to the resumption of lending, the ‘Daily Nation’ newspaper reported. In addition to the Economic and Public sector Reform Credit, the World Bank is also expected to go to its board during the next few months with two additional loans applications: one for a US $50 million HIV-AIDS Disaster Response Project and another for a US $75 million Emergency Power Support Operation for Kenya.