By David Ndirangu
Sh115 billion is what Kenya needs to withstand the economic effects of the Coronavirus crisis. This is according to Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge. An appeal has been made to the World Bank and International Monetary Fund (IMF) for the rescue package.
Already, Kenya is in a financial crisis due to the reduction of transactions in the economy. This could get worse as the government puts on more measures to limit movement of people, something that would end up shutting down many sectors of the economy. The governor had earlier projected that the pandemic could slow down economic growth from 6.2 percent to 3.4 percent. The hardest hit sectors are aviation, tourism and export markets.
The Ministry of Health is bound to be the beneficiary of the first batch of the support funds amounting to Kshs 5 billion. Another Kshs 35 billion is under discussion for emergency purposes. This is the second time this year that Kenya is seeking emergency funds from the World Bank, after the Kshs. 8 billion received for fighting the locust invasion.
Kenya has already been named as one of the priority countries that need to be shielded from the adverse effects that such a crisis might cause. According to Dr. Njoroge “The fundamental concerns and anxieties centre on the health impact, job losses, and the duration of the crisis.”
Last week, the CBK’s Monetary Policy Committee (MPC) lowered Central Bank Rate from 8.25 percent to 7.25 percent, and reduced the cash reserve ratio from 5.25 percent to 4.25 per cent, so as to make sure banks had available funds to lend. In doing this, the governor estimated that Kshs 35.2 billion would be made available as additional liquidity. The commercial banks on their part have given bailouts and loan repayment holidays to various businesses.
When making the announcement, Dr.Njoroge did not reveal the terms and conditions attached to the loans, though he assured that details would be revealed at another press conference. As an encouragement to the business community, the governor said that they are working on several measures that would help minimize the shock to their businesses and ensure continuity. “This cloud will pass and when it is done we need to recover,” he said.