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MPs plot to impeach Njuguna Ndung’u, Kamau Thugge over shilling free fall

Parliament has directed the Treasury and the Central Bank of Kenya (CBK) to stabilise the depreciating shilling within the next one month or it will start the process of removing top officials from office.

The National Assembly’s Public Investments Committee on Commercial and Energy Affairs told the Treasury Principal Secretary Chris Kiptoo and CBK governor Kamau Thugge to stop the free fall of the currency by January or prepare to be forced out of office.

The committee expressed concerns over the failure of the government to put measures to reverse the depreciation of the currency against the US dollar and other world major currencies.

“We are directing you to put tangible measures to reverse the free fall of the shilling. Otherwise, we will start the process of removing you from office after one month because you are charged with ensuring the Kenya shilling is stable,” David Pkosing, who chairs the committee, said.

Dr Thugge told the committee that the shilling is expected to stabilise early next year with the expected injection of $678 million from the International Monetary Fund (IMF) in January 2024. He said the World Bank board will be meeting in January to discuss Kenya’s request for $1.5 billion which the country expects to receive by March next year.

“If we get external financing, that will be part of the solution because we will accumulate our reserves, stabilise the exchange rate and provide liquidity to the National Treasury to reduce domestic borrowing and domestic interest rate,” Dr Thugge said.

“The IMF board is meeting on January 17 and within days they will disburse the full $678 million. It will give us sufficient reserves to keep our liquidity.”

The Kenya shilling has been depreciating against the greenback, exchanging at Sh152.8 to the dollar on Friday.

Dr Thugge said with Kenya having arrived at a clear understanding of how to settle the $2 billion Eurobond that is due to be repaid in June next year, the extra financial injection from IMF and the WB, the country should see a stabilisation of the exchange rate in one or two months.

“Under the IMF programme, we have managed to have $3.3 billion. We are missing an additional $938 million out of the $4.4 billion concessional financing to be paid for many years with a grace period and the interest is low,” Dr Thugge said. “Under the WB, we have developed a policy operation. We have agreed over three years to have $12 billion to the economy.”

Mr Pkosing said Kenyans want the Treasury, under the leadership of Njuguna Ndung’u as the Cabinet Secretary, and the CBK to rein in the shilling that is increasing the cost of debt repayment.

“Kenyans are saying ‘bring the shilling down’. How you will bring it down is up to you. The truth of the matter is that there is a problem in the country. We gave you the responsibility to bring the shilling down,” Mr Pkosing said.

“Our worry is where Dr Kiptoo is going to get money to retire the loans. The exchange rate is eating about 40 percent of the revenues we are raising. As leaders, we know the country is hurting because of the deteriorating shilling. We are raising taxes to pay for exchange rate fluctuations and not development.”

Dr Kiptoo said the Treasury and the CBK are working to reverse the shilling slide and assured MPs that the country will pay all its debt obligations as and when they fall due without default.

The Pokot South MP made the remarks during a meeting with Dr Thugge and Dr Kiptoo over the impending dissolution of the CBK-run Kenya School of Monetary Studies (KSMS).

The committee is investigating the circumstances under which the Treasury CS stopped the Attorney General from proceeding to wind up the school following the recommendation of the Central Bank of Kenya governor. The Central Bank is seeking to wind up the KSMS but has faced a challenge after the Treasury blocked the move.

Dr Thugge expressed frustrations over the slow pace of dissolving the KSMS which is fully owned by the banking sector regulator. KSMS trains manpower for the financial services sector.

Mr Pkosing had invited Dr Thugge and Dr Kiptoo to explain why it has taken three years to conclude discussions on the wind-up.

He gave the two top government officials a deadline of tomorrow (Tuesday) to make a final decision.

The Registrar of Companies gazetted a notice to dissolve the Ruaraka-based institution in 2020.