NAIROBI, Kenya, June 25-The Central Bank of Kenya has maintained its benchmark lending rate at 7.00 percent, citing that the policy measures adopted since the outbreak of the coronavirus disease were having the intended effect on the economy.
According to CBK, these measures will also be augmented by the announced fiscal measures.
MPC first lowered the rate to 7 percent in April this year.
“The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent,” reads the MPC statement.
The banking sector remains stable, CBK said, with strong liquidity and capital adequacy ratios.
At the same time, CBK revealed that as a result of emergency measures it announced in mid-March, personal loans worth Sh199.1 billion had been restructured by May.
For other sectors such as trade, real estate, tourism, transport and communication and manufacturing, a total of Sh480.6 billion had been restructured.
Total loans that have been restructured are worth Sh679.6 billion and accounted for 23.4 percent of the total banking sector loan book of Sh2.9 trillion.
According to CBK Sh30.8 billion, of the Sh35.2 billion that was dispatched to the banking system had been used to support some of the sectors that have been hard hit by the outbreak of the coronavirus disease.
“To date, 87.6 percent has been used to support lending, especially to the tourism, transport and communication, real estate, trade and manufacturing sectors,” he said.
Further, the committee revealed that the foreign exchange reserves that stand at USD 9,210.6 million continued to cushion the country against the short-term shocks in the foreign exchange market.
Private sector credit meanwhile stood at 8.1 percent in twelve months to May 2020 with growth being more profound in the manufacturing, trade, finance and insurance, consumer durables, and construction sectors.
Exports of goods improved by 4.1 percent in the period January to May 2020, mainly driven by tea, horticulture and re-exports.
The Committee noted the fiscal measures announced by the Government in the Budget Statement for FY2020/21, to stimulate the economy and cushion vulnerable citizens and businesses from the adverse effects of COVID-19.
“The Economic Stimulus Programme targets to support growth of key sectors of the economy including agriculture and food security, infrastructure development, tourism, manufacturing, education, health, information and communications and the MSMEs,” MPC ‘s chair, Patrick Njoroge said.
The MPC added that it will continue monitoring the impact of the policy measures and is prepared to take additional measures if necessary.