Kenya’s Central Bank appeared to deny new Vice President Rigati Gachagua’s claims, blaming the East African country for lacking sufficient foreign currency to import oil. According to the bank, all foreign currency used for private transactions and oil imports comes from commercial banks.
The central bank procures foreign exchange only for the government
The Central Bank of Kenya has hit back at statements by Vice President Rigati Gachagua suggesting that the East African country lacks foreign exchange reserves to import fuel.18} In a statementit said that under these circumstances, “we do not supply foreign exchange for non-government transactions.”
According to the bank, all foreign currency used for private transactions and oil imports is sourced from commercial banks. This has been the case since the foreign exchange market was fully liberalized in the 1990s, the bank’s statement added.
In addition, the Central Bank of Kenya (CBK) insisted that it is mandated to comply with the requirements of the country’s Central Bank Act. Known as the Central Bank of Kenya Act,(26) this law requires that.
[T]he CBK shall at all times use its best efforts to maintain external asset reserves of not less than four months’ worth of imports from the records and averages of the last three years.
Kenya’s bleak outlook
According to CBK, Kenya’s import cover stood at 4.64 months as of September 26, 2022. The statement also revealed that CBK had $7.42 billion in usable foreign reserves as of September 29, 2022.
In an interview with Citizen Digital, Gachagua, Kenya’s recently appointed vice president, said Kenya’s economic outlook is bleak. He said the dire situation had forced the new government to end fuel subsidies. Gachagua added that President William Ruto’s government intends to prioritize increasing food production.
However, in a statement denying Gachagua’s claims, the CBK insisted that it would “continue to provide adequate cover and buffer against shocks in the foreign exchange market.”
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