The Central bank of Kenya has contradicted Deputy President Rigathi Gachagua’s claims that it did not have sufficient foreign exchange for oil importers insisting it does not control foreign exchange for commercial banks.
The regulator said that oil importers, as all other private transactions, obtain the requisite foreign exchange from commercial banks.
“All foreign exchange for private transactions is obtained from commercial banks. CBK does not supply foreign exchange for transactions other than for the National Government or CBK operations,” CBK said in a statement providing their stance on the matter.
In an interview with Citizen TV, Mr Gachagua said the country’s financial situation is so bad that it does not have enough foreign exchange reserves to import oil.
“Tumekosa maneno ya foreign exchange hata jana pale katika Benki Kuu hakukuwa na zile pesa za kigeni za kutosha kuagiza mafuta kutoka nchi za nje (We have insufficient foreign exchange and the Central Bank does not have enough foreign currency for importing fuel),” said Mr Gachagua.
The DP, commenting on the cost of fuel, also said the government was compelled to stop the fuel subsidy program owing to a cash crunch as the program risked crippling the country.
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Oil marketers had expressed concern about losing money despite receiving payment from the government through the subsidy program. Some oil marketers claimed the Energy and Regulatory Authority's (EPRA) subsidy compensation was based on the official printed dollar exchange rate thus exposing them to losses.
The government was spending an average of Sh7.65 billion every month to subsidise fuel and contain the ever rising cost of living, highlighting the adverse impact of the subsidy on the country’s revenues.
Removal of the subsidy is one of the conditions from the IMF under a Sh270.2 billion ($2.34 billion) budget support scheme that will run for 38 months.
However, in their statement, Central Bank maintained its foreign exchange cover is adequate and that it continues to provide adequate cover and a buffer against shocks in the foreign exchange market, as per the laws stipulating their operations.