CBK reserves up Sh32.6bn on fresh IMF inflows
The Central Bank of Kenya headquarters in Nairobi.
The official usable foreign exchange reserves held at the Central Bank of Kenya (CBK) have jumped by Sh32.6 billion ($203 million) in the wake of fresh funding inflows from the International Monetary Fund (IMF).
Data from the banking regulator shows the reserves totalled Sh1.159 trillion ($7.017 billion) as of Thursday last week (January 25,2025), up from Sh1.094 trillion ($6.84 billion) previously.
They are now equal to 3.75 months of import cover compared to 3.64 months of import cover a week prior.
Foreign exchange reserves make up national assets held as a safeguard by the CBK to ensure the availability of foreign exchange to meet the country’s external obligations including imports and exter-nal debt servicing.
The reserves are largely funded by inflows of external debt, which are usually denominated in hard currencies.
CBK foreign exchange reserves have been under pressure from the reduced external debt inflows over the past two years with Kenya having been locked out of the international capital markets by in-hibitive cost of credit.
Pressure on the reserves has been exacerbated by increased external debt payments, which when combined with the reduced inflows, have given rise to a sustained period of Kenya shilling weakness.
Despite falling below the recommended minimum threshold of four months of import cover, CBK has insisted that the reserves remain adequate to meet any balance of payments needs.
“The usable foreign exchange reserves remained adequate at $7.017 million (3.8 months of import cover) as of January 25. This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover,” CBK said last week.
On January 17, the IMF completed the sixth review of its Extended Fund Facility and Extended Credit Facility (EFF/ECF) and the first review of the Resilience and Sustainability Facility (RSF) allowing the im-mediate disbursement of Sh109.9 billion ($684.7 million) to Kenya this month.
The fresh funds were expected to boost the reserves ahead of the expected Sh321.2 billion Eurobond maturity in June.
The government is widely expected to tap the reserves to meet the maturity as access to the interna-tional capital markets remains constrained.
The new funding from the IMF is expected to be complemented by new flows from the World Bank’s Development Policy Operations and the African Development Bank (AfDB).
AfDB is for instance expected to disburse Sh15.3 billion.New funds from the IMF have already been topped by a Sh33.7 billion ($210 million) loan from the Trade and Development Bank.
