Central Bank of Kenya (CBK) latest data shows the reserves stood at Sh996.3 billion ($8.873 billion) last Thursday, covering 5.42 months’ worth of imports, down from Sh1.021 trillion ($9.094 billion) on November 11.
The drop came in a month when the Treasury was due to make payments worth Sh28.14 billion ($251.05 million) in external debt principal and interest payments, mainly to lenders of Kenya’s 2019 Eurobond, China and the World Bank.
Kenya’s foreign reserves fell by Sh21.8 billion in the week to November 18, weighed down by external debt repayments due this month.
Central Bank of Kenya (CBK) latest data shows the reserves stood at Sh996.3 billion ($8.873 billion) last Thursday, covering 5.42 months’ worth of imports, down from Sh1.021 trillion ($9.094 billion) on November 11.
The drop came in a month when the Treasury was due to make payments worth Sh28.14 billion ($251.05 million) in external debt principal and interest payments, mainly to lenders of Kenya’s 2019 Eurobond, China and the World Bank.
The CBK makes the foreign loan repayments on behalf of the government, as well as obligations to the State’s external suppliers.
The regulator can also sell dollars in the market to stave off volatility when the shilling is weakening, or alternatively buy hard currency when the volatility is on a strengthening bias.
Data from the World Bank Debtor Reporting System shows that principal and interest repayments for China’s bilateral debt accounted for the biggest share of the external payments at Sh9.2 billion ($81.8 million).
The Treasury also paid Sh8.93 billion ($79.5 million) in semi-annual interest for its third Eurobond that was floated in May 2019.
In the offer, Kenya raised $2.1 billion (Sh236 billion at today’s exchange rate) in two tranches of seven years ($900 million) and 12 years ($1.2 billion), which attract interest of seven percent and eight percent respectively.
The World Bank— through International Bank for Reconstruction and Development and International Development Association — was due Sh5.6 billion ($49.9 million) in repayments while Sh1.86 billion ($16.6 million) was due to the African Development Bank.
The CBK however maintains that the reserves it holds remain sufficient to provide cover for imports, and in effect the shilling in the foreign exchange market.
The shilling has been weakening though in the last few weeks, exchanging at 112.28 against the dollar yesterday on end month demand from importers in the energy and manufacturing sectors, traders said.
Dollar inflows from agriculture exports, new external loans and diaspora remittances however continue to offer support to Kenya’s current account.
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