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New loan inflows bulk up foreign currency reserves

Kenya has lined up a Sh2.62 trillion budget but expects to collect only Sh1.7 trillion in taxes. file photo | nmg
Kenya has lined up a Sh2.62 trillion budget but expects to collect only Sh1.7 trillion in taxes. file photo | nmg 

Kenya’s foreign currency reserves have progressively risen in the last four months to hit 5.30 months of import cover as at April 6 up from 5.11 on March 30 on the back of loan inflows and reduced imports.

Data from the CBK shows forex reserves stood at Sh829.8 billion ($8.26 billion) a week ago compared to Sh799.3 billion ($7.731) the previous week. However, at the end of the Good Friday week, there was a slight drop to $7.9 billion representing 5.6 month cover.

“The rise is driven by reduced imports and recent syndicated loan of $1.5 billion (154 billion shillings),” said Francis Mwangi, who heads research at SIB.

The forex reserves have remained above the minimum four-month import cover recommended by law for the last eight weeks.

In March, The Treasury signed a $500 million (Sh51.5 billion) long-term loan agreement with the African Export-Import Bank (Afreximbank) and Trade and Development Bank (TDB), formerly PTA Bank.

The facility, for which Afreximbank and TDB acted as joint mandated lead arrangers, was part of the three-facility $1.55 billion (Sh154.6 billion) package secured by the Treasury to plug the deficit.

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