Coronavirus: CBK seeks Ksh.116 billion in emergency support from World Bank and IMF

Coronavirus: CBK seeks Ksh.116 billion in emergency support from World Bank and IMF
Central Bank of Kenya (CBK) Governor Patrick Njoroge at Tuesday’s post Monetary Policy Committee news conference on March 23, 2020. PHOTO| COURTESY

The Central Bank of Kenya (CBK) is seeking in excess of Ksh.116.6 billion in emergency support from the World Bank and IMF to strengthen Kenya’s response to the Covid-19 pandemic.

Speaking at Tuesday’s post Monetary Policy Committee news conference, CBK Governor Patrick Njoroge said the government had made request for an initial $50 million (Ksh5.3 bilion) request from the World Bank towards supporting health sector.

The governor also revealed that additional request of Ksh.30.1 billion ($300 million) from the World Bank and Ksh.79.5 billion ($750 million) from the International Monetary Fund (IMF) and had been made respectively.

“Several countries have made the request for emergency funding from the international financial services, we too as Kenya has also indicated its interest in this.” he said.

While the World Bank funding will be directed to the Covid-19 response directly, the IMF facility will be geared towards budgetary support. This, Njoroge adding will be crucial in sustain Kenya’s programmes in the period.

“These are all official flows; some of them were not on our radar. This is coming to support ongoing emergency response and with definitely build into our reserve.”

According to the CBK, the request for further funding serves to fit the it’s purpose of ensuring the ongoing health crisis across the globe does not become worse off economic problem.

“We know we can get much larger shocks and that’s one of the reasons why we have insisted we do need insurance. We have been working with the IMF to put in place a program to cover ourselves from extreme shocks,” said Dr. Njoroge.

Further, the lender remains engaged with the IMF on the capture of a precautionary program as its external position remains exposed to greater shocks as talks towards a new Standby Credit Facility (SCF) from the institution drag on.

On Monday, the CBK through the Monetary Policy Committee lowered its base lending rate from 8.25 per cent to 7.25 per cent. The regulator further trimmed its commercial bank reserve ratio to 4.25 for the first time in nearly eight years.

Both the CBK and the National Treasury have trimmed their economic growth projection to a low 3.4 and 3.6 per cent respectively as they price in the economic disruption brought about the virus’s crisis.

“Banks are liquid but we could end up getting pockets of tightness. We wouldn’t want this becoming a liquidity problem,” said the CBK boss.

Later this week, the National Treasury is expected to deliver a new stimulus package to the economy with the view of providing further buffers to the economy.

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