“The IMF team urged the authorities to review the interest rate controls introduced in September 2016 with a view to abolishing them or substantially modifying them. The controls have contributed to slow overall credit growth to the private sector, and lower access to credit by SMEs and individuals. In addition, interest rate controls are undermining the effectiveness of monetary policy aimed at ensuring price stability and supporting sustainable economic growth.
“ The authorities requested a six-month extension of the SBA that expires on March 13, 2018 to allow more time to complete the outstanding reviews of the IMF-supported program . In support of this request, the authorities have committed to policies to achieve the program objectives, including reducing the fiscal deficit and substantially modifying interest controls. Discussions on the details of these policies will continue in the coming weeks. The SBA extension will be presented to the Executive Board before its expiration on March 13, and outstanding program reviews could be completed by September 2018. The team thanks the authorities for their hospitality and constructive discussions.
“The team met with the President, Uhuru Kenyatta; Cabinet Secretary for the National Treasury, Henry Rotich; the Governor of the CBK, Patrick Njoroge; the Principal Secretary for the National Treasury, Kamau Thugge; the Deputy Governor of the CBK, Sheila M’Mbijjewe, and other senior government and CBK officials. Staff also had productive discussions with parliamentarians, civil society organizations, representatives of the private sector, and development partners.”
Background: On March 14, 2016, the Executive Board of the International Monetary Fund (IMF) approved a SDR 709.259 million (about US$989.8 million) 24-month Stand-By Arrangement (SBA) and a SDR 354.629 million (about US$494.9 million) 24-month Standby Credit Facility (SCF) for Kenya, for a combined SDR 1.06 billion (about US$1.5 billion, or 196 percent of Kenya’s quota). SCF arrangements cannot be extended beyond 24 months. The first review was completed on January 25, 2017 (see Press Release 17/23) and second and third reviews were not completed.
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