Kenya needs Sh223bn to bridge the external financing gap

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According to the International Monetary Fund (IMF), the country needs at least Sh223.7 billion ($2.1 billion) to stabilize the economy that has been shaken by the pandemic exposing the local currency to volatility.

The amount is an addition Sh101.2 billion that the treasury had initially estimated (Sh122.5) required from external sources to deal with the pandemic for balance of payment as well as any spending related to the virus.

“The Covid-19 shocks has given rise to an urgent balance of payment (BoP) financing needs in Kenya. The pandemic is having a pronounced negative impact on the economy, including sharp declines in the services sector and agricultural efforts, as well as severe disruptions of supply chains. Staff projects that real GDP growth will drop to 0.8 percent in 2020.”  Said the IMF report.

IMF has already advanced Kenya Sh78.4 billion, implying the country needs another Sh145.3 billion to be able to finance the IMF project. Part of the initial Sh122.5 billion was expected to be covered by the World Bank, but the IMF estimates much more money, pointing out that the shilling weakened due to a retreat to the dollar.

“Reflecting the US dollar’s strong appreciation against most other currencies, the shilling depreciated by 5.4 percent between February 28 and March 24.” Said the IMF report.


About Author

Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: Contact: +254 780216631

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