A view of the International Monetary Fund (IMF) headquarters in Washington was captured on April 8, 2019. Photographer: Yuri Gripas for REUTERS. Licensing available upon request.
Kenya is eyeing an additional financial boost from the International Monetary Fund before the current year wraps up. They’ve entered discussions about merging the seventh and eighth evaluations of their economic support plan, according to the country’s central bank leader, who shared this on Wednesday.
Back in early June, Kenya and the IMF struck a staff-level understanding regarding the seventh assessment of the $3.6 billion initiative.
However, the IMF’s board hasn’t given the nod yet since the Kenyan administration was compelled to withdraw planned tax hikes and initiate budget cuts, following intense demonstrations that unfortunately led to casualties.
“We are nearing the home stretch with the IMF,” remarked Governor Kamau Thugge during a media briefing, a mere day after the Central Bank of Kenya sliced its primary lending rate by 75 basis points.
The Kenyan authorities have also requested the IMF to perform an official review of issues surrounding corruption and governance.
This evaluation might not directly influence the impending funds, but it’s a step towards fostering positive relations with the IMF as they strive to realign their financial posture.
Moreover, Thugge mentioned that Kenya’s central bank has been purchasing U.S. dollars from the foreign exchange market to strengthen its defenses against any abrupt economic disturbances.
The bank typically has no preference for the shilling’s level but only steps in to curb extreme fluctuations in the forex market.
Thugge concluded that the inflows of dollars, due to agricultural exports, remittances, and foreign investment driven by enticing local interest rates, are bolstering the exchange rate.
He reiterated the bank’s prediction of a 5.5% economic growth for the following year.
On the previous day, the bank shaved down its 2024 growth projection from 5.4% to 5.1%, after observing slower growth in Q2.
Thugge also hinted at the likelihood of a further drop in local interest rates, considering the stable exchange rate of the shilling.
Report compiled by George Obulutsa and fine-tuned by Alexander Winning
Edited by: Ali Musa
Axadle international–Monitoring
