The government through the Central Bank of Kenya (CBK) is seeking in excess of Sh116.6 billion ($1.166 billion) in emergency support from the World Bank and the International Monetary Fund (IMF) to strengthen Kenya’s response to the Covid-19 pandemic.
Speaking on Tuesday during the post Monetary Policy Committee news conference, CBK Governor Patrick Njoroge said the government had made a request for an initial $50 million (Sh5.3 billion) from the World Bank towards supporting the health sector.
“Several countries have made the request for emergency funding from the international financial services, we too as Kenya has also indicated its interest in this.” he said.
On top of the World Bank’s loan, Kenya is seeking an additional request of Sh30.1 billion ($300 million) from the World Bank and Ksh.79.5 billion ($750 million) from the International Monetary Fund (IMF).
The World Bank funding will be directed to the Covid-19 response directly while the IMF’s will be geared towards budgetary support.
In an effort to soften the blow on ordinary Kenyans and encourage local banks to offer cheap loans, CBK through the Monetary Policy Committee lowered its base lending rate from 8.25% to 7.25%. The regulator further trimmed its commercial bank reserve ratio to 4.25 for the first time in nearly eight years on Monday.
This comes on the backdrop of the National Treasury forecasting that the country’s economic growth rate will shrink to 3.6% from the 6.1% projected at the start of the year.
“What is ahead of us is real, our economy will not be the same and tourism which has climbed for the last two years in terms of forex contribution is equally going to be affected,” Labour Cabinet Secretary Simon Chelugui said on Monday while addressing the press.
Sectors, Jobs on the firing line
While the coronavirus pandemic has virtually touched every sphere of the economy and ground normal daily lives to a halt, some sectors of the economy are more exposed than other.
“First, the outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021. To get there, it is paramount to prioritize containment and strengthen health systems—everywhere. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be." IMF Managing Director Kristalina Georgieva said during a conference call of G20 Finance Ministers and Central Bank Governors on Monday.
Georgieva disclosed that nearly 80 countries have since reached out to them requesting for help. To this end, IMF is replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. Georgieva says IMF is ready to deploy all our US$1 trillion lending capacity.
Mr. Chelugui further warned that job cuts are imminent as the majority of businesses struggle to stay afloat amidst widespread disruption to economic activity.
“Certain groups will be dis-proportionally hit as tourist and remittance source countries in Europe, the Gulf and Europe face a similar slowdown,” said CS Chelugui.
The International Labour Organisation (ILO), reckon the resulting Covid-19 outbreak will result in the layoff of an estimated 25 million people across the globe. In Kenya, already about 30,000 casual workers working in flower farms have been axed while over 40,000 permanent staff have been asked to go home with their fate unknown over coronavirus pandemic.