Kenya ‘Not in a Rush’ for IMF Loan, Central Bank Governor Says

(Bloomberg) -- Kenya’s central bank chief said the East African nation is not in a hurry for a new standby loan facility from the International Monetary Fund, and doesn’t have a timeline on when negotiations should conclude.

“We are not in a rush,” Governor Patrick Njoroge told reporters in Kenya’s capital, Nairobi on Thursday. “We have had meetings and i expect that we will continue with these talks when we go for the spring meetings in April.”

A similar facility, where the IMF availed $1.5 billion for Kenya to draw from in the event of balance-of-payments shocks, expired in September. Negotiations for the loan are happening as the government plans to sell $2 billion of Eurobonds this year.

Njoroge made the comments amid market sentiments that having the IMF facility in place would be reassuring for buyers of Kenyan debt, as the Washington-based lender said the government needs to further reduce its fiscal deficit.

“Some of us may feel that these two things are so aligned and that is why some people think we are under pressure,” Njoroge said. But having an IMF program and going to the Eurobond market are separate things, he said.

“We do know the benefits and we are working to ensure we have a program that works for us and is favorable for us,” Njoroge said.

Rates-Cap Appeal

At the same briefing, the governor said that the bank will be part of an appeal against a court ruling that annulled a law capping interest rates, but said it can’t fault lawmakers for legislating on an interest-rate ceiling. The central bank had earlier criticized the law that capped borrowing rates at 4 percentage points above the benchmark rate, and said it complicated monetary policy formulation.

READ: Kenya Banks, Economy Seen Winning as Rate-Cap Law Annulled

While a consumer body that earlier appealed the ruling wants the rate cap, the regulator will be in court to defend its role in formulating monetary policy. The law encroaches on the central bank’s policy-formulation role, Njoroge said.

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