Kenya will miss out on emergency financing from the World Bank sought to cushion the economy from the fallout of the Middle East conflict, with the lender instead set to consider Nairobi’s earlier request for a $750 million (Sh97.1 billion) loan.
The size of the emergency funding request was not disclosed, but it is understood to have been similar to the planned loan facility.
During the World Bank and International Monetary Fund Spring Meetings in Washington DC in April, Kenya sought emergency financing to bolster its external buffers after foreign exchange reserves fell by $1.2 billion between March 5 and April 9, 2026.
Disclosures by the World Bank show that its Board of Executive Directors is scheduled to consider Kenya’s Sh97.1 billion Development Policy Operation (DPO) before the end of this month. However, the emergency financing request does not form part of the agenda.
Just last week, Central Bank of Kenya Governor Kamau Thugge said the government remained hopeful that the World Bank would approve both the DPO and the emergency financing.
“We are still in the process of discussing with the World Bank on the DPO, and we hope that it will go to the board for discussion fairly shortly. So far there haven’t been any disbursements regarding the emergency financing, but it is an ongoing discussion, and we hope that this will be finalised quite shortly,” Dr Thugge said when asked about the status of Kenya’s request for emergency financing from the World Bank.
Speaking to the Business Daily on the sidelines of the Spring Meetings on April 17, Dr Thugge said Kenya was seeking additional financing beyond the Sh97.1 billion DPO facility.
“With the World Bank, we hope that we can reach agreement on the Rapid Results Operation so that we can get additional financing over and above the Development Policy Operation. Our hope and expectation is that this money will come in this financial year (2025/26),” he said.
The DPO is a fast-disbursing financing facility designed to help countries address actual or anticipated development financing needs. It supports poverty reduction and climate-friendly, sustainable and inclusive growth through policy and institutional reforms, including improvements in public financial management, the investment climate, service delivery, economic diversification and climate action.
Delayed facility
The DPO has been in the pipeline since the 2024/25 financial year but suffered delays following the collapse of Kenya’s programme with the International Monetary Fund in March 2025 and concerns over legislation on conflict of interest in the public sector.
President William Ruto signed the Conflict of Interest Act into law in July 2025 after Parliament reconsidered the Bill following reservations that an earlier draft did not go far enough in addressing graft.
Among its provisions, the law bars public officers from extending preferential treatment beyond what is permitted by law and from being influenced by benefits received outside their official employment.
World Bank disclosures show the proposed loan will focus on three areas: promoting equity, efficiency and transparency in public finance; fostering more competitive and inclusive product and labour markets; and strengthening climate action.
Securing the DPO before the close of the financial year would help shore up Kenya’s foreign exchange reserves at a time of heightened global uncertainty.
The country’s reserves stood at $13.24 billion in the week ended June 11, equivalent to 5.6 months of import cover.
Of the Sh97.1 billion under consideration, Sh53.1 billion will come from the International Development Association (IDA) and Sh44 billion from the International Bank for Reconstruction and Development (IBRD).
IDA is the World Bank’s concessional lending arm for low-income countries, while IBRD provides market-based financing to middle-income economies.
Financing pressures
The timing of the board meeting is critical given the government’s financing challenges ahead of the June 30 close of the financial year.
“The implementation of the 2025/26 budget has remained broadly on course despite emerging pressures on revenue performance and expenditure demands,” Treasury Cabinet Secretary John Mbadi told the National Assembly during the presentation of the 2026/27 Budget.
“On the revenue front, performance had fallen short of target due to slower than expected tax receipts largely driven by administrative constraints and a slowdown in economic activity.”
By the end of April 2026, revenue collection stood at Sh2.66 trillion, missing the target by Sh67.6 billion. Total expenditure reached Sh3.64 trillion, exceeding the target by Sh64.6 billion.
In the financial year beginning July 1, the government plans to finance a budget deficit of Sh1.15 trillion through Sh1.03 trillion in domestic borrowing and Sh116.2 billion from external sources.
