Money Markets
The National Treasury building in Nairobi. PHOTO | FILE
By REUTERS
In Summary
- Kenya secured the year-long, insurance-type loan in February last year to help it deal with any unforeseen shocks that could threaten economic stability.
Kenya's $680 million standby credit with the
International Monetary Fund has been extended to March as both sides
work on a new facility with similar features, the IMF's resident
representative said.
The country secured the year-long, insurance-type loan in
February last year to help it deal with any unforeseen shocks that could
threaten economic stability.
"We are now working on extending it for a few weeks
just because we are in dialogue with the government to present a new
programme to our board before the end of this quarter," Armando Morales
told Reuters late on Monday.
"We agreed with the authorities that it was prudent
to maintain that insurance during the discussion for the new
programme," he said.
The Central Bank of Kenya (CBK) calmed volatility
in the markets last year after hiking its benchmark lending rate by 3
percentage points to 11.50 per cent and has increased foreign reserves
without turning to the IMF standby loan.
The shilling weakened 11 per cent against the
dollar last year, less than most frontier currencies, and has been
steady this year.
Morales said this showed the government had "the
will and the tools necessary" to maintain stability in the economy,
strengthening the case for a new standby loan.
The IMF expects Kenya's economy to grow by 6 per
cent this year, from an estimated 5.6 per cent last year, driven by
farming, expectations of macroeconomic stability and Kenya's minimal
exposure to slowing emerging markets like China.
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