Kenya is negotiating with the International Monitory Fund (IMF) for a precautionary facility, CBK has revealed.
Speaking at the Monetary Policy Committee press briefing yesterday, CBK governor Patrick Njoroge said negotiations are ongoing but did not give more details.
‘’They were here the other time. Yes there are some negotiations but we are not in a hurry. It is good for the country to have an insurance cover in case of instability,’’ Njoroge said.
He however said there is need to evaluate and identify need before taking the facility, adding that the country has $8.13 billion ( 813 billion) worth of forex cover to sustain 5.3 months of imports.
Kenya seems to be adopting a reconciliatory path with the international lender after a few months of a shaky relationship following the expiry of IMF‘s standby facility to the country in September last year.
The $1.5 billion (Sh150 billion) facility first expired in March last year but Kenya applied for a six-month extension to September, promising to cut on fiscal deficit, debt and recurrent expenditure as demanded by IMF.
Upon the expiry of the facility in September, Treasury CS Henry Rotich told journalists that Kenya was working on a self-sustaining formula to ease dependency on precautionary funds. “The fact that we did not tap into it last year when the country experienced tough economic times caused by prolonged drought shows that we are self-reliant and can do without it,” Rotich said.
His sentiments were echoed by CBK, with the regulator saying the economy was well protected against capital outflows and did not need IMF’s precautionary credit.
Kenya’s relationship with IMF deteriorated further after the international lender accused Kenya of propping up its currency, hence overvalued by 17.5 per cent.
The report was however dismissed by CBK as incoherent, with governor Njoroge accusing IMF of using an experimentation tool that undervalued the true market value of the shilling.
