NAIROBI, Kenya, Feb 28 – Energy Cabinet Secretary (CS) Davis Chirchir has said that the government will ask for up to a year to pay for imported petroleum products amid dollar shortages in the country.
According to Reuters, the state is unable to pay for the commodities on delivery.
This comes at a time when the country’s foreign exchange reserve dropped to Sh869 billion ($6.84 billion), which is only enough to cover 3.83 months of imported goods, below the statutory requirement of 4 months.
Kenya imports the vast majority of its fuel from countries such as Saudi Arabia and the United Arab Emirates, among others, and pays in dollars.
In January of this year, the Kenya shilling sank to a historic low of Sh124 against the US dollar.
The Google currency tracker mapped the Kenyan shilling at 124 units against the greenback immediately after the market opened on Monday morning, strengthening to 123.90 at midday.
Forex traders attributed the shilling’s weakening to increased dollar demand from oil retailing companies and general goods importers.
The depreciating shilling, despite the growth in reserves, means that dollar supply in the market is lower than dollar demand.
A recent report from the International Monetary Fund (IMF) stated that Kenya is experiencing a tight period of forex demand coupled with reduced liquidity in the interbank foreign exchange market as well as a depreciation of the local currency following the war in Ukraine.
