Apart from the problems caused by a high debt load, the economy faces social unrest and financial risks, the report found.
The bank urged the government to tackle "structural imbalances" that "hinder Kenya's goal of sustained and inclusive growth".
The World Bank downgraded Kenya's economic growth estimate for this year to 4.7 per cent on Tuesday, from an initial 5.0 per cent, citing the impact of floods, anti-government protests and flailing fiscal consolidation efforts.
The East African nation has managed to stabilise its foreign exchange rate, boost hard currency reserves held by the central bank and lower inflation this year, but it still faces a high risk of debt distress, the World Bank said in a new report.
