IMF says Kenya's external position is strong
NAIROBI, Sept 14, 2018 (News Wires) - The International Monetary Fund (IMF) considers that Kenya’s external position is strong, its representative in Nairobi said on Friday, adding that the Fund would continue to support its reform efforts even though a stand-by loan deal has expired.
Kenya had secured a six-month extension in March of the $989.8 million arrangement. However, the IMF set conditions for a further extension, including the repeal of a cap on commercial lending interest rates which was imposed in 2016, a move that parliament rejected in a finance bill last month.
President Uhuru Kenyatta sent the bill back to parliament on Thursday night, but what happens next regarding the rate cap is not yet clear.
IMF representative Jan Mikkelsen confirmed what the government said on Thursday: that the deal was over.
“The second review of the IMF-supported program has not been completed, and the program will expire today,” he told Reuters. “It should be stressed that Kenya’s external position remains strong and foreign exchange reserves are at a very comfortable level.”
Foreign exchange reserves stood at $8.56 billion at the end of last week, equivalent to 5.71 months’ worth of Kenyan imports, central bank data showed. The bank is required by law to hold reserves worth a minimum of four months of import cover.
The central bank expected the current account deficit to shrink to 5.4 percent of gross domestic product at the end of this year, from 5.8 percent in June, Governor Patrick Njoroge said in July.