, NAIROBI, Kenya, Feb 23 – National Treasury Cabinet Secretary Henry Rotich has said the government will review the interest rate capping law that has contributed to the slow-down of credit to the private sector.
Speaking to the Financial Times in London when he officiated the trading of the Eurobond at the London Stock Exchange, Rotich said Treasury will introduce reforms that will bring back market-driven interest rates while at the same time protecting consumers from adverse rates.
“We will come up with a package of reforms that will help us get out of the current arrangement so we can extend credit to the private sector.”
He has also reiterated the Government’s commitment to halve the country’s budget deficit in three years which has been a concern to Bretton Woods institutions with the IMF and World Bank urging for fiscal consolidation.
A delegation from the IMF on Thursday in meeting with the National Assembly Budget Committee expressed concern over the growing budget deficit now at 8.9 percent of the GDP while also calling for a repeal of the interest rate capping law.
Central Bank of Kenya Governor Dr. Patrick Njoroge, who has been against interest rate capping, in January said the caps have acted as a break to the growth of the economy as banks have reduced lending to the private sector and opting for government securities.