Otiato Guguyu
Central Bank of Kenya (CBK) Governor Patrick Njoroge addressing the press at his office on Thursday, 28, 2019, [ PHOTO;Beverlyne Musili]
The Central Bank of Kenya (CBK) will play a key role in building a
strong case against an appeal to revise a High Court ruling on the rate
cap.
The law capping interest rates was declared unconstitutional by a
three-judge bench, but the judgment has been challenged in a higher
court.
CBK has jumped on the opportunity presented by the
appeal to argue that the law is interfering with its mandate.
CBK boss, Dr Patrick Njoroge, also announced that the country is in no
rush to secure a new standby credit facility with the International
Monetary Fund (IMF) as the economy remains resilient. He, however, noted
that a deal that serves the country better will eventually be secured.
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“We
are not in a rush. We have had meetings and i expect that we will
continue,” Dr Njoroge told reporters during a press briefing.
With regard to the interest caps, Dr Njoroge hopes the CBK will be
allowed to join the appeal. In the initial petition filed by Boniface
Oduor, CBK was only an interested party.
The High Court ruled that Oduor was unable to convince it that the rate
cap interfered with monetary policy, but CBK said they have a strong
case to prove this at the Court of Appeal.
“We have cross-filed after the ruling was appealed because I think it is
us who should convince the court that this matter is an encroachment
into the role of the Monetary Policy Committee (MPC),” Dr Njoroge said
yesterday in Nairobi. The MPC on Wednesday discussed the rate cap
ruling, stressing that interest rate ceiling constrains the formulation,
conduct and effectiveness of the monetary policy.
“Further, these interest rate caps have hampered access to credit by
growth sectors, particularly Micro Small and Medium Enterprises,” Dr
Njoroge said. The High Court had ruled that the rate cap law was vague,
imprecise and ambiguous and sections of it imposing penal charges on
bank CEOs, including penalties and sentences were unconstitutional. The
courts gave the National Assembly 12 months within which to amend the
law.
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Consumer
Federation of Kenya then appealed the ruling as the second interested
party, being dissatisfied with part of the argument of justices Francis
Tuiyott, Rachel Ngetich and Jacqueline Kamau.
Private sector credit grew by 3.4 per cent in the 12 months to February compared with three per cent in January.
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