Kenya has Sh700b forex reserves to fight any Brexit fallout

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Njoroge said whatever the outcome of the British exit from European Union (Brexit), Kenya has about Sh560 billion ($5.6billion) in forex reserves that can cover five months of its import bill. “We also have $1.5billion (Sh150 billion) available for us from the IMF precautionary window that we can draw from in case of need,” he said. The International Monetary Fund (IMF) more than doubled the emergency loans available for Kenya in the next two years to Sh150 billion. This means that cumulatively, the country has more than Sh700 billion to protect itself from any external shocks. Unlike other standard loans given by the IMF, Kenya can only access the loan if it is faced with ‘exogenous shocks that lead to an actual balance of payments need.’ Kenya’s import cover hit the lowest in September, dropping aggressively to below the three months cover threshold, as it battled the slide of the shilling. The situation became dire when the country’s re-usable foreign exchange reserves dropped below the four months import cover threshold, weakening the bank’s ability to support the shilling.SEE ALSO :CBK: Forex reserve declines by Sh50b
But the Central Bank has since reversed the trend after stabilizing the currency. The law obligates the CBK to at all times maintain a reserve of external assets at an aggregate amount of not less than the value of four months import as recorded and averaged for the last three preceding years.