Kenya has requested rapid financial support from the World Bank to help it manage the shocks from the war in Iran, its central bank governor told Reuters on Thursday.
Like other nations that are heavily reliant on energy imports, the East African country is scrambling to stave off shortages of essential commodities including petrol, while managing cost increases that could drive up inflation.
The request for funds was “significant”, Kamau Thugge told Reuters on the sidelines of the IMF World Bank spring meetings, without providing a figure.
Any help would be in addition to a budgetary support loan, known as development policy operations, that both sides were discussing before the outbreak of the crisis, he said.
Rapid Response Support is an umbrella term used by the World Bank for its fast‑disbursing financial windows and policy support that helps countries respond quickly to shocks or crises.
Close eye on currency
Kenya’s shilling weakened slightly at the peak of the fighting between the U.S. and Israel and Iran, but has since clawed back most of the losses, Thugge said.
“If there’s pressure….definitely it will depreciate,” he said, adding that the central bank has enough reserves to curb volatility.
“What I would say is that depreciation will be orderly. The whole point about why we have been building these international reserves to where they are, to the highest levels, was precisely to be able to avoid excessive volatility.”
Hard-currency reserves at the central bank stand at above $13 billion, equivalent to 5.8 months’ worth of import cover.
The central bank was pressing ahead with its plan to add gold into its reserves, Thugge said, adding that policymakers were studying domestic gold purchase models that have successfully been used by other countries.
Asked about future interest rate moves, Thugge said this would be determined by economic data in the run-up to June’s policy meeting.
The central bank paused its easing cycle at last week’s meeting, opting to hold rates to assess the impact of the oil price shock.
- Kenya has requested urgent financial aid from the World Bank to manage economic shocks caused by the war in Iran, focusing on energy import challenges and inflation risks.
- The financial support sought is "significant" and will complement an already-discussed budgetary support loan with the World Bank.
- Kenya's shilling experienced slight weakening during the peak conflict but has mostly recovered, with the central bank prepared to manage orderly depreciation using ample reserves.
- The central bank holds over $13 billion in hard-currency reserves (about 5.8 months of import cover) and plans to diversify into gold reserves.
- Future interest rate decisions will depend on incoming economic data, with the central bank currently pausing rate cuts to evaluate the impact of rising oil prices.
Like other nations that are heavily reliant on energy imports, the East African country is scrambling to stave off shortages of essential commodities including petrol, while managing cost increases that could drive up inflation.
Rapid Response Support is an umbrella term used by the World
"If there's pressure....definitely it will depreciate," he said, adding that the central bank has enough reserves to curb volatility.
"What I would say is that depreciation will be orderly.
Hard-currency reserves at the central bank stand at above $13 billion, equivalent to 5.8 months' worth of import cover.
Asked about future interest rate moves,
