The Kenya shilling has been on a seven month long losing streak, closing out the year at its weakest level of 113.09 per dollar on December 23.
Troubling times ahead as shilling weakens for a second year
Who will save us?
The shilling has depreciated 3.5% to the dollar this year adding to a 7.8% loss last year. According to Bloomberg, the biggest monthly decline was in August when it weakened 1.3%, while July-September was the weakest quarter after depreciating 2.4%
“During the pandemic, the exchange rate acted as a shock absorber, reversing the previous trend of real effective exchange rate appreciation,” the International Monetary Fund said in a report released Thursday.
“This has helped absorb some of the impact of the Covid-19 shock, which reduced sources of foreign exchange for Kenya,” IMF concluded.
The depreciation comes only days after the International Monetary Fund approved a disbursement of Sh29billion for Kenya despite debt currently at Sh7.7 trillion.
The delivery of IMF funds brings total disbursements to Sh109billion out of a total Sh259billion available under the country’s program approved in April, the IMF said in a statement released on Friday.
"Kenyan authorities have kept up a strong commitment to their reform agenda in a challenging environment and are acting to cut debt vulnerabilities while supporting the economic recovery," the IMF said.
Officials have maintained careful control of government spending to limit the deficit and are taking steps to reform state-owned enterprises to limit pressure on the budget while protecting social programs, the fund said.
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