Kenya has requested emergency financing from the World Bank to cushion the economic impact of rising oil prices triggered by the conflict involving Iran, central bank governor Kamau Thugge said.
Speaking on the sidelines of the Spring Meetings of the International Monetary Fund and World Bank in Washington, Thugge described the request as “significant,” though he did not disclose the amount.
The funding would come through the World Bank’s rapid-response facility, designed to provide fast-disbursing support to countries facing external shocks. It would complement a separate Development Policy Operation loan that Nairobi had already been negotiating before the crisis escalated.
Kenya’s move underscores the mounting pressure on its external position, as higher global oil prices strain foreign exchange reserves and investor sentiment.
The Central Bank of Kenya has spent about US$941 million in recent weeks to support the shilling, equivalent to nearly 7 percent of its reserves in just one month, according to Thugge.
The intervention marks a sharp shift from the central bank’s earlier stance. At its April 9 Monetary Policy Committee briefing, the bank had projected resilience, citing steady growth, inflation at 4.4percent and foreign reserves of $13.4 billion.
At the time, policymakers held the benchmark interest rate at 8.75 percent, pausing an easing cycle that had seen rates cut by 425 basis points since August 2024.
However, the escalation of conflict in the Middle East — and its impact on energy markets — has forced a reassessment.
As a net importer of oil, Kenya is particularly vulnerable to price shocks, which can widen the current account deficit, weaken the currency and fuel inflation.
Finance Minister John Mbadi said the country continues to rely on support from the IMF to maintain macroeconomic stability and advance fiscal reforms.
Following meetings in Washington with IMF Managing Director Kristalina Georgieva, officials said discussions focused on inflation dynamics, reform priorities and the broader economic fallout from the geopolitical crisis.
Analysts say the request for emergency funding highlights the speed at which external shocks can alter economic conditions, even for countries that appeared relatively stable weeks earlier.
They add that while Kenya’s reserves remain at moderate levels, continued intervention to support the currency could erode buffers if global pressures persist.
The World Bank’s rapid financing, if approved, is expected to provide short-term liquidity support, helping Kenya stabilise its external position while longer-term policy adjustments are implemented.
The development reflects broader challenges facing emerging markets as geopolitical tensions, tighter financial conditions and commodity price volatility reshape the global economic outlook.
