Kenya has turned to the World Bank for rapid additional funding by June to cushion its economy from the shocks of the US-Israel war with Iran.
This means that Kenya now expects a bigger disbursement from the World Bank, much higher than the $750 million (Sh96 billion) loan that was factored into the 2025/26 budget at the beginning of the fiscal year in July 2025.
Kenya’s request for additional financing from the World Bank comes against the backdrop of the recent decline in foreign exchange reserves, which fell by $1.3 billion (Sh167.9 billion) between March 5 and April 9, 2026, to close at $13.3 billion (Sh1.7 trillion), translating to 5.7 months of import cover.
The Central Bank of Kenya (CBK) said that the additional World Bank cash is expected before the close of June 2026 and will be drawn from the multilateral lender’s rapid repose financing schemes. This will mark an additional financing request beyond the earlier targeted $750 million (Sh96.93 billion) Development Policy Operation (DPO) loan to Kenya, which, however, remains withheld due to delays in enacting reforms.
‘We have had very good discussions with the World Bank on the DPO and also getting additional financing, given the kind of shocks that we are facing. We hope that we can reach an agreement with the World Bank on the Rapid Results Operation so that we can get additional financing over and above the Development Policy Operation (DPO),’ CBK Governor, Kamau Thugge, told Business Daily on the sidelines of the just concluded Spring Meetings in Washington, DC.
The CBK did not indicate how much additional funds Kenya targets to receive from the World Bank, but termed it a ‘significant’ amount.
‘Our hope and expectations are that this money will come in this financial year. The amount of financing is yet to be determined, but it is about getting additional financing from already existing commitments which are yet to be disbursed,’ Dr Thugge said.
‘I would say it is a significant amount and could be quite close to the size of the DPO itself. Because this funding has already been approved by the board, there will not be any need for additional approval,’ the CBK boss added.
The multilateral lender uses the DPO to support countries in implementing policy and institutional reforms to achieve economic growth and reduce poverty. The DPOs offer financial assistance in exchange for specific policy changes designed to improve areas like public finance, market efficiency, and climate action.
Kenya has, however, not tapped the DPO loan after the World Bank expressed reservations over delayed reforms linked to the reinforcement of fiscal management, improving governance, and tackling conflicts of interest among public officials.
President William Ruto signed the Conflict of Interest Act on July 30, 2025, as part of Kenya’s attempt to address the impasse with the World Bank.
The Conflict of Interest Act, which came into effect on August 19, 2025, repealed the Public Officer Ethics Act and established a consolidated statutory framework to regulate and manage conflicts of interest within the public sector.
Dr Thugge said that whereas the CBK is comfortable with the present level of foreign exchange reserves at 5.8 months of import cover, there is a need to further strengthen the country’s buffers, given the uncertainty around the US/Israel – Iran War and how long it will last.
‘Over the last two years, we have been able to build our reserves to a fairly sizeable level. It’s important to look at what has happened with the exchange rate. The reason why we built these reserves was to have a very orderly depreciation in the event of a shock. When this crisis happened, the Shilling was at about 129, and it smoothly went up to 130. The ceasefire was announced, and it has since retraced its path back,’ Dr Thugge says.
Kenya is battling renewed inflationary pressure amid disruption in the importation of key items, including petroleum products. The ongoing Middle East war, which first started on February 28, has disrupted activities on the Strait of Hormuz, a global chokepoint serving as an artery for 20 percent of the world’s total oil supply and 30 percent of the world’s maritime trade.