Kenya is expected to roll out a fiscal plan that will guard businesses against ravages of Coronavirus.
Central Bank governor Patrick Njoroge revealed this at a post-Monetary Policy Committee (MPC) briefing yesterday, saying the fiscal package will involve the private sector and the labour sector.
He, however, fell short of revealing the amount of cash to be involved, saying details will be unveiled in due course.
"Expect fiscal package with the involvement of the private sector and labour sector. This will help limit the damage of coronavirus," Njoroge said.
His sentiments were echoed by Treasury cabinet secretary Ukur Yatani who told Reuters that fiscal stimulus measures would be announced later this week.
The exchequer boss went on to announce that the government is going to release a total of Sh59 billion to clear pending bills and tax refunds to ease the flow of liquidity into the market.
"Kenya’s government plans to pay pending bills to suppliers and quickly process tax refunds for firms to support the economy in the face of the coronavirus crisis," Yatani told Reuters.
Reuters reported that Sh49 billion will be released to offset the unpaid bills, and a further Sh10 billion released to expedite the payment value-added tax refunds to businesses in the next two-three months.
Njoroge said at least 16 counties have fully cleared their pending bills while 31 others are still holding a substantial amount meant for suppliers.
Treasury is however pessimistic about economic growth especially due to the disruption of supply chain and distressed revenues as a result of the virus that has since infected 16 people in the country.
According to Treasury, it expects revenues to drop by Sh70 billion in three months to the end of this current financial year. Kenya Revenue Authority was expected to collect a total of sh1.6 trillion.
The apex bank has already implemented stimulus measures, cutting the base lending rate by 100 basis points on Monday to 7.25 per cent from 8.25 per cent.
This is expected to effectively reduces interest rates by a similar margin. Meaning, if your bank was charging you an interest rate of 14 per cent on your current loan, it will reduce it to 13 per cent.
It also freed up Sh35.2 billion and made it immediately available to commercial banks to support distressed borrowers as a result of the novel coronavirus (Covid -19).
Njoroge appealed to lenders to support borrowers especially personal loans that account for 28 per cent of the total value of the banking sector and small businesses that power the country’s economy.
