Kenya’s foreign exchange reserve rose by 9 percent after it received a $739 million loan from the International Monetary Fund (IMF). Since March, the country’s reserve was seeing a decline, media reports said.
According to the Central Bank of Kenya data, the country’s usable foreign exchange reserves increased to $8,532 million as of May 14 compared to $7,809 from the previous week. The increase was equivalent to 5.14 months of import cover.
The Central Bank of Kenya said, “This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover.”
IMF had approved the disbursement of $739 million to Kenya last week. The amount will be drawn under the Rapid Credit Facility (RCF), media reports said. IMF said in a statement, “This will help to meet Kenya’s urgent balance of payments need stemming from the outbreak of the Covid-19 pandemic.”
The loan from IMF would enable Kenya to maintain a healthy forex reserve and provide budget support in the face of the pandemic, media reports said. Also, stabilising the forex reserve will allow preserve the local currency against global fluctuations.
Last month, Kenya was in talks with the World Bank and the IMF for budget support as well as emergency assistance. It had requested $750 million from World Bank for budget support and $350 million from the IMF as a means of emergency assistance.
It is reported that Kenya’s funds were anticipated to slowly start coming in by April or May. In March, the Kenyan shilling had weekend 5 percent against the dollar.