Nairobi: Kenya is expected to receive about $400 million in emergency financing from the World Bank within six weeks to help address risks including an Ebola outbreak in the region and El Nino-related disruptions, a source familiar with the matter said.
The East African country applied for the World Bank’s emergency financing facility – known as a Rapid Response Option – after the start of the Iran war in February sent crude oil prices sharply higher.
However, risks facing the country have broadened beyond pressure from high energy prices on government finances, the source told Reuters.
EBOLA, EL NINO, ENERGY PRICES PILE ON PRESSURE
A spokesperson for the World Bank said the lender is supporting Kenya to finalise a framework to access rapid financing when “an eligible crisis or emergency occurs, including the conflict in the Middle East and El Nino,” without providing more details.
Kenya’s ministry of finance did not respond to a request for comment.
The financing would help mitigate the impact of Ebola on the health sector, the El Nino weather phenomenon on agriculture and water resources, and high energy prices on the economy as a whole, the source said.
More than 3,000 people have died from the worst outbreak of Ebola in nearby Democratic Republic of the Congo that also spread for a period in Kenya’s direct neighbour Uganda.
Kenya suffered its most severe El Nino episode in 1997, when months of heavy rain destroyed crops and damaged roads and homes.
World Bank emergency financing for countries like Kenya is typically capped at 10% of a country’s undisbursed lending portfolio, which would give Kenya access to roughly $400 million, the source said.
Kenya has a World Bank project portfolio exceeding $7 billion, of which about $3 billion has been disbursed or committed.
The two sides are finalising a Contingency Emergency Response Project setting out the funding terms, with the final amount dependent on the undisbursed balance when it is completed, the source said.
The World Bank board has already cleared the projects underpinning the Rapid Response Option, allowing funds to be released once the document is finalised.
Kenya has sought new financing sources as rising debt repayments have squeezed fiscal space in recent years.
(Reporting by Duncan Miriri, editing by Karin Strohecker and Andrew Heavens)
