Kenya Seeks $1.2 Billion From IMF, World Bank Amid Virus

(Bloomberg) --

Kenya is in talks with the World Bank for budget support of $750 million and the International Monetary Fund for $350 million in emergency assistance.

The East African nation also expects to receive $50 million from the World Bank to support its efforts against the brunt of the coronavirus pandemic, central bank Governor Patrick Njoroge said in a briefing held a day after policy makers cut the benchmark interest rate to an eight-year low.

Talks between Kenya and the IMF for a standby credit facility are ongoing on, he said. Kenya has 16 confirmed cases of the coronavirus.

The funds could start flowing by end-April or early May and “will undoubtedly also support our reserves,” Njoroge said.

Kenya has $8.25 billion in reserves, sufficient for five months of imports, according to the central bank. Apart from the monetary measures that include a drop in the cash reserve ratio to increase liquidity, the government is also expected to announce some fiscal actions, Njoroge said.

‘Malicious Actors’

While the dollar has appreciated against most currencies, other factors have been driving a slide by the Kenyan shilling, Njoroge said, blaming a “misunderstanding” by some dealers about the central bank’s plans to shore up its reserves by buying as much as $100 million monthly. There are also some “malicious actors in the market,” he said.

The Kenyan shilling has weakened 5% so far this month to its lowest yet against the dollar. It touched a record 107.20 in earlier trade on Tuesday.

“Our exchange-rate policy hasn’t deviated,” Njoroge said. “It’s always been a flexible exchange-rate regime, but we intervene to minimize volatility.”

Read more: Kenya Cuts Key Rate to 8-Year Low as It Halves Growth Forecast

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