Central bank eyes more IMF cover despite recent fallout

Central Bank of Kenya (CBK) governor Patrick Njoroge. FILE PHOTO | NMG 

By PATRICK ALUSHULA

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Summary

• CBK governor Patrick Njoroge said Nairobi will move carefully without sacrificing the independence of the apex bank, even as he described Kenya as a worthy member of IMF with relationship beyond the lapsed precautionary arrangement.
• In the absence of the March 2016 IMF insurance that expired recently, Dr Njoroge said he is banking on the available reserves to help cushion the economy from external shocks.
• Latest CBK data puts reserves at $8.507 billion (or Sh859.67 billion) as at September 20, being an equivalent of 5.6 months import cover.

Kenya will still engage the International Monetary Fund (IMF) for a precautionary facility despite the “adequate” 5.6 months import cover, Central Bank of Kenya has said.

Central Bank of Kenya (CBK) governor Patrick Njoroge said Nairobi will move carefully without sacrificing the independence of the apex bank, even as he described Kenya as a worthy member of IMF with relationship beyond the lapsed precautionary arrangement.

“There is a very dynamic relationship that you cannot just walk away from. There is no divorce. We want to continue with those engagements. Whether it will lead to a precautionary arrangement, that is for later,” the former IMF official and co-signatory of Kenya's agreement with the fund said.

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“There is no feeling like we are under somebody’s control. The issue of independence of CBK from other actors is also important.”

In the absence of the March 2016 IMF insurance that expired recently, Dr Njoroge said he is banking on the available reserves to help cushion the economy from external shocks.

Latest CBK data puts reserves at $8.507 billion (or Sh859.67 billion) as at September 20, being an equivalent of 5.6 months import cover.

This is a comfortable positon when compared to the minimum target of four months or East African Community’s benchmark of 4.5 months, according to the governor. He said Kenya has weathered jitters in the global financial markets, Brexit, interest increases in the advanced economies and trade wars without drawing on the IMF facility.