- Non-performing loans eased to 14.2 per cent in April compared to 14.5 per cent in February
- Growth in private sector credit remained resilient at 6.8 percent
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The Central Bank of Kenya's monetary committee has retained the base lending rate at seven per cent, citing stable microeconomics as the country slowly recovers from the ashes of Covid-19.
In a statement, CBK said the Monetary Policy Committee (MPC) will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary.
According to the apex bank, the inflation rate is expected to remain within the target range in the near term, supported by lower food prices and muted demand pressures, despite the recent increase in fuel prices.
Month-on-month overall inflation stood at 5.8 per cent in April compared to 5.9 percent in March.
The banking sector which took a bite from strict Covid-19 protocol last year is recovering with strong liquidity and capital adequacy ratios.
The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.2 per cent in April compared to 14.5 per cent in February.
Repayments and recoveries were noted in the transport and communication, real estate, tourism, restaurants and hotels and agriculture sectors.
Growth in private sector credit remained resilient at 6.8 per cent in the 12 months to April 2021, with significant loan repayments and recoveries in March and April.
Strong credit growth was observed in: transport and communications (13.3 per cent), agriculture (10 per cent), finance and insurance (7.6 per cent), and consumer durables (19.3 per cent).
The number of loan applications picked up in May, following a dip in April.
Furthermore, exports of goods remained strong, growing by 5.5 per cent in the first four months of 2021 compared to a similar period in 2020.
Significantly, receipts from exports of horticulture and manufactured goods rose by 27.7 per cent and 33.9 per cent respectively, in the first four months of 2021 compared to a similar period in 2020.
Nevertheless, receipts from tea exports declined by 5.6 percent, reflecting the impact of accelerated purchases in 2020.
Imports of goods increased by 15.2 per cent in the period under review compared to a similar period in 2020, largely as a result of improvements in imports of intermediate goods.
Receipts from services exports remained subdued, mainly due to weaknesses in international travel and transport.
Remittances were strong at $299.3 million in April 2021 and were 23.3 per cent higher in the first four months of 2021 compared to a similar period in 2020.
The current account deficit is estimated at 5.2 percent of GDP in the 12 months to April and is projected to remain at the same level in 2021.
The CBK foreign exchange reserves, which currently stand at $7.447 billion (4.55 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.