This archive report was first published on 25 June 2020.
On June 25, the Central Bank of Kenya (CBK) announced that it would maintain its benchmark lending rate at 7.00 percent, a decision that reflects the positive impact of its policy measures on the economy.
According to CBK, the policy measures adopted since the outbreak of the coronavirus disease have been successful in stabilizing the economy, and the announced fiscal measures will further augment these efforts.
The Monetary Policy Committee (MPC) first lowered the rate to 7 percent in April this year, and the decision to retain the Central Bank Rate (CBR) at 7.00 percent was made after considering the current accommodative monetary policy stance.
CBK also reported that the banking sector remains stable, with strong liquidity and capital adequacy ratios.
As part of its emergency measures, CBK revealed that personal loans worth Sh199.1 billion had been restructured by May, while a total of Sh480.6 billion had been restructured for other sectors such as trade, real estate, tourism, transport and communication, and manufacturing.
These restructured loans accounted for 23.4 percent of the total banking sector loan book of Sh2.9 trillion, and Sh30.8 billion of the Sh35.2 billion dispatched to the banking system had been used to support some of the sectors hard hit by the outbreak of the coronavirus disease.
CBK also noted that the foreign exchange reserves stood at USD 9,210.6 million, providing a cushion against short-term shocks in the foreign exchange market.
Private sector credit stood at 8.1 percent in twelve months to May 2020, with growth being more profound in the manufacturing, trade, finance and insurance, consumer durables, and construction sectors.
Exports of goods improved by 4.1 percent in the period January to May 2020, mainly driven by tea, horticulture, and re-exports.
The MPC noted the fiscal measures announced by the Government in the Budget Statement for FY2020/21, which aim to stimulate the economy and cushion vulnerable citizens and businesses from the adverse effects of COVID-19.
According to MPC chair, Patrick Njoroge, the Economic Stimulus Programme targets to support growth of key sectors of the economy, including agriculture and food security, infrastructure development, tourism, manufacturing, education, health, information and communications, and the MSMEs.
CBK will continue to monitor the impact of the policy measures and is prepared to take additional measures if necessary.
