Following a meeting of the Monetary Policy Committee (MPC), it was revealed in a statement sent to newsrooms that the benchmark interest rate would be lowered by 0.25% to 7% from 7.25%. The new rate represents the lowest base lending rate in the country since September 2011.
Commercial banks are thus expected to offer greater Covid-19 support loans to distressed Kenyan businesses and individuals affected by the pandemic
Central Bank of Kenya Governor Patrick Njoroge addresses a news conference at the Central Bank’s buildings on Tuesday, May 28, 2019.
Citizen Digital
At the same time, Njoroge revealed that measures announced in March by the Central Bank were having the intended impact. It was disclosed thatĀ commercial banks had released Ksh15.3 billion from the Ksh35.2 billion released by CBK to banks at the end of March following the lowering of the Cash Reserve Ratio (CRR).
Among the sectors which reaped big from the Covid-19 support loans are tourism, agriculture and real estate.
ā43.5% of the funds released to the banking system have been utilised so far, with the tourism, real estate, trade and agricultural sectors being the main beneficiaries,ā the statement noted.
It was also revealed that following measures announced by the CBK on March 18, loans worth Ksh81.7 billion had been restructured.
“Loans amounting to Ksh81.7 billion have been re-structured, mainly to tourism, restaurants and hotels (31%), real estate (17.2%), building and construction (17.0%) and trade (12.4%,” the statement read in part.
It was observed that the pandemic had disrupted crucial sectors including agriculture and tourism, Kenya’s biggest foreign-exchange earners after remittances.
“Analyses of the impact of the pandemic shows a significant decline in horticulture exports particularly flowers from March to Mid-April 2020, mainly due to reduced demand in Kenya’s key export market destinations.
“The latest information shows that orders have started to return, reflecting the impact of mitigation measures put in place by the government particularly those targeted at maintaining cargo flights.
“This also reflects the lifting of lock-down measures and easing of supply restrictions in some of the key destination markets, and availability of additional cargo space offered by several airlines,” the statement adds.
It was also disclosed that the country had entered negotiations with the International Monetary Fund (IMF) for a precautionary facility to protect the economy from the shocks of Covid-19.
CBK disclosed that the MPC would continue to monitor the economic situation in Kenya and around the world, with a meeting scheduledĀ forĀ May.
Central Bank of Kenya (CBK) building in Nairobi.
Simon Kiragu
kenyagist.com
