Kenya is confronted with the need to chart a course that attends directly to the recent public outcry. The widespread protests that started in June and resulted in tragic loss of lives and injuries were triggered by the authorities’ efforts to correct a large tax revenue shortfall in FY2023/24 through revenue raising proposals in the 2024 Finance Bill, some of which were unpopular or seen as regressive. The protests forced the President to withdraw the Bill, introduce significant spending cuts through a Supplementary Budget in July, and reconstitute the Cabinet in August. Persistent difficulties in mobilizing revenue coupled with spending rigidities have led to a further accumulation of pending bills, and necessitated deep cuts in development spending, with potential for knock-on effects on growth and debt sustainability. Against this backdrop, preceded by large exogenous shocks (COVID-19, global developments impacting import price and affordable access to market finance, and severe multi-season droughts), the authorities face a complex and difficult balancing act: meeting critical spending needs for priority areas (social programs, health, and education), servicing large upcoming debt obligations, and boosting domestic revenues. Earlier in the year, Kenya addressed the exceptional balance of payments (BoP) needs associated with repayment of the June 2024 US$2 billion Eurobond, boosting market confidence that helped strengthen the shilling and build reserves. Meanwhile, fiscal pressures continue, including from uncertainty surrounding the constitutionality of the 2023 Finance Act on which the Supreme Court’s decision is awaited.
Related Organizations
- DOI
- https://doi.org/10.5089/9798400291067.002
- ISBN
- 9798400291067
- ISSN
- 1934-7685
- Issue
- 316
- Pages
- 117
- Published in
- United States of America
- Series
- Country Report No. 2024/316
- StockNumber
- 1KENEA2024003
- Volume
- 2024
Table of Contents
- Kenya - 2024 - Revised WB RSF AL - 7th and 8th EFF-ECF and RSF Reviews - to SEC 102124.pdf -1
- A. Country Vulnerability to Climate Change Including Human, Social and Economic Costs for the Country Arising from Climate Change Vulnerabilities 166
- B. Government Policies and Commitments for Climate Change Adaptation and Priority Areas to Strengthen Resilience 167
- C. Government Policies and Commitments for Climate Change Mitigation and Priority Areas to Reduce Greenhouse Gas Emissions 167
- D. Other Challenges and Opportunities 168
- E. World Bank Engagement in the Area of Climate Change 168
- This update to the RSF Assessment Letter—Kenya (dated June 28, 2023) highlights relevant changes that have occurred since the issuance of the Assessment Letter. 170
- A. Country Vulnerability to Climate Change Including Human, Social, and Economic Costs 170
- B. Government Policies and Commitments for Climate Change Adaptation and Priority Areas to Strengthen Resilience 170
- C. Government Policies and Commitments in for Climate Change Mitigation and Priority Areas to Reduce Greenhouse Gas Emissions 171
- D. Other Challenges and Opportunities 171
- E. World Bank Engagement 172
- Kenya - 2024 - Revised Supplement DSA - 7th and 8th EFF-ECF and RSF Reviews - No SC - 102924.pdf -1
- Public debt coverage 134
- BACKGROUND on debt 136
- underlying assumptions 138
- country classification and determination of scenario stress tests 147
- EXTERNAL DEBT SUSTAINABILITY ANALYSIS 148
- PUBLIC DEBT SUSTAINABILITY ANALYSIS 149
- CLIMATE CHANGE RISKS 150
- Risk Rating and vulnerabilities 152
- Authorities’ views 154
- Kenya - 2024 - Revised Compiled Staff Report with LOI-MEFP-TMU - 7th and 8th EFF-ECF and RSF Reviews - No SC - 102924.pdf -1
- Context 14
- Recent Macroeconomic developments—a mixed picture 15
- program Performance—fiscal slippages and delayED reforms 20
- Outlook and Risks—positive medium–term prospects but elevated near–term risks 23
- Policy discussions—A credible fiscal policy and steadfast reforms are paramount 24
- A. Fiscal Policy—Renew Consolidation Efforts to Safeguard Debt Sustainability 25
- B. Public Financial Management and State Corporations—Further Scope for Mitigation of Fiscal Risks 29
- C. Monetary, Exchange Rate, and Financial Sector—Ensure Stability 32
- D. AML/CFT, and the Governance and Anti-Corruption Framework—Addressing the Deficiencies and Strengthening the Frameworks 34
- E. The Climate Agenda Under the RSF Arrangement 35
- Program Modalities and Risks 38
- Staff Appraisal 42
- I. Quantitative Performance Criteria and Benchmarks -1
- II. Performance Criterion on the floor of the Primary Balance of the National Government -1
- III. Performance criterion on the floor of ordinary revenue -1
- IV. Performance Criterion on the floor on the stock of Net International Reserves of the Central Bank of Kenya -1
- V. ceiling on accumulation of the Public and Publicly Guaranteed External payment Arrears -1
- VI. Ceiling on the present value of Contracting or Guaranteeing of New External Debt -1
- VII. Ceiling on New Domestic Guarantees Granted by the National Government -1
- VIII. Monetary Policy Consultation Clause -1
- IX. Floor on the Tax Revenue of National government -1
- X. Indicative Target on the ceiling of the change in the stock of the National Government Exchequer Requests Outstanding for more than 90 days -1
- XI. Indicative Target on ceiling of nonACCUMULATION OF NET DOMESTIC PAYMENT ARREARS -1
- XII. Indicative Target on the floor of the Priority Social expenditures of the national government -1
- XIII. data Reporting -1
- Kenya - Press Release Board Meeting - October 2024.pdf -1
- FOR IMMEDIATE RELEASE 3
