The Central Bank of Kenya (CBK) has differed with Deputy President Rigathi Gachagua that the country did not have enough foreign exchange reserves to import oil on Saturday.
In a statement on Sunday night, CBK said that it does not supply foreign exchange currency for transactions other than for the national government.
“First, following the complete liberalization of the foreign exchange market in the 1990’s, 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 (i.e., government’s own imports or debt service payments) or CBK’s operations. Oil importers, therefore, obtain their requisite foreign exchange from commercial banks and not CBK,” said CBK.
Speaking to Citizen TV on Sunday night, Gachagua claimed that the country does not have enough foreign exchange reserves, even to import fuel.
“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. Wengine walidhani nimekosa nidhamu kusema manenyo yale mbele ya wageni, ni kweli tulijua kweli uchumi ni mbaya, lakini hatukujua kwa kiasi gani (We lack even foreign exchange reserves at the Central Bank to import fuel. People thought I lacked discipline to say all that before visitors. Yes we knew the economy is bad, but we never knew it was to this extent),” Gachagua said.
“Why there was a forex problem is because of state capture. There was a lot of interest in banks where very senior people in government own certain banks and they got involved in this forex business,” he added.
CBK is required by the Central Bank of Kenya Act (Section 26) to at all times use its best endeavours to maintain a reserve of external assets at an aggregate amount of not less than the value of four months’ imports as recorded and averaged for the last three preceding years.
In the statement, CBK said that its foreign exchange reserves stood at 4.64 months of imports as of September 26, 2022.
“Under the EAC Monetary Union Protocol, members “undertake to attain and maintain a reserve cover of 4.5 months of imports” calculated in line with the CBK Act. This stood at 4.64 months of imports as of September 26, 2022. CBK also monitors its usable foreign exchange reserves. These stood at USD7,424 million (4.19 months of import) as of September 29, 2022. • In the context of the IMF-supported economic program, the end-June 2022 adjusted target for net international reserves was USD5,989 million This stood at USD6,295 million,” noted CBK.
“The CBK foreign exchange reserves, therefore, continue to provide adequate cover and a buffer against shocks in the foreign exchange market,” the statement added.
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