Central Bank of Kenya intends to complete outstanding policy reviews not limited to that of interest rate caps by June this year.
This means that three months from today, the bank is likely to have made a conclusions on whether to abolish or modify the interest rate caps, a move set to see the cost of loans rise.
Addressing the press , a day after lowering the Central Bank Rate by 0.5 percentage points , CBK governor Patrick Njoroge said that the decision to review the CBR was made on the backdrop of a contained inflation and signs of a strong fiscal consolidation at the Treasury.
Early this month, the International Monetary Fund through a statement sent to the press said that Kenya had agreed to make adjustments on its economic policies.
This saw IMF extending the precautionary facility of $1.5 billion ( Sh 152 billion ) whose review was postponed last year extended by six months to September 2018.
While access to these funds by Kenyan authorities is available , Njoroge said that it is only subject to completing ongoing policy reviews.
“The extension has happened, but if we wanted to draw down the funds, it is on condition that we complete the reviews and we expect to complete the review sometimes in June," he said.
In addition, Njoroge called on the Commercial Banks to tighten their Risk Assessment exercise to borrowers especially on the current stock of loans.
“We have sent a strong signal to the commercial banks and the borrowers that the economy can benefit from a lower interest rate environment and therefore Commercial banks need to react appropriately,” he said.
This comes as the ration of gross-non performing loans to gross loans increased to 11.4 per cent in February from 10.6 per cent in December 2017.
This slight rise was attributed to to an increase in non-performing loans in the manufacturing sector and loan repayments in the transport and communication sector.