Kenya's Mwai Kibaki hoped donors would follow the IMF lead

It claims a further $50m and 40m euros will be disbursed immediately in 2003. Finance Minister David Mwiraria said: "Nearly 60% of all that money will be in grants and 40% is in concessionary loans."

The news comes two weeks after The International Monetary Fund resumed aid to Kenya after a three-year gap and approved a loan of $250m.

This will support the government's efforts to help economic recovery, starting with an infrastructure rehabilitation programme Razia Khan, chief economist Africa, Standard Chartered Bank

Mr Mwiraria said the amount was beyond his expectations.

"It definitely will reduce the current budget deficit but I cannot reveal by how much at the moment," he said.

He said more than 90% of the pledged $4.1 billion to help mainly development and budgetary support would go directly to the government, while the rest would be channelled through various aid agencies.

Donor agencies and 25 countries attended the east African country's first donor conference in seven years, where the money was pledged.

'Outlook brighter'

Razia Khan, chief economist Africa, at Standard Chartered Bank, said: "Typically, funds pledged by donors tend to be higher than the assistance that is actually disbursed over time.

"Even so, the news is positive, and will support the government's efforts to help economic recovery, starting with an infrastructure rehabilitation programme.

"While growth in 2003 will still languish around 2%, the outlook for 2004 is now much brighter.

"A growth rate of 4.2% next year, rising further in the medium term, is now possible. This will signal the highest growth that Kenya has seen since the mid-1990s."

The IMF had frozen help because of concerns over corruption and due to the country's poor economic record.

But following its resumption of aid, president Mwai Kibaki had hoped donors would follow the IMF's lead and resume financial support.