Forex reserves up 12pc on external loans proceeds

Kenya’s official forex reserves have gone up by $921 million this year, boosted by proceeds of the government’s external borrowing even as debt repayments, market sales in support of the shilling and higher demand from importers continue to drain dollars.

The pile of dollars stood at $7.72 billion (Sh872 billion) in the first week of January, and had risen to $8.64 billion (Sh976.3 billion) by December 16, with a 2021 peak of $9.63 billion (Sh1.09 trillion) on September 9.

The reserves at Central Bank of Kenya saw two significant jumps in June and September, coinciding with new external debt uptake, including a $1 billion (Sh113 billion) Eurobond, $715 million (Sh80.8 billion) from the International Monetary Fund (IMF)and $750 million (Sh84.8 billion) from the World Bank

“Foreign exchange reserves were bolstered by significant inflows in the second quarter of 2021, including Eurobond issuance, budget support from the World Bank, and two disbursements from the Fund,” said the IMF in a report on Kenya released last week.

CBK uses the country’s official forex reserves, to make external payments on behalf of the government, for instance, servicing external debt or paying overseas suppliers.