[ad_1]
The Central Bank of Kenya has been accused of managing the shilling and overvaluing it by up to 30 percent.
A report titled ‘Kenya’s Economic Puzzle-Putting the pieces together’ insinuates that the CBK has not been operating a free float currency.
“…the value Ksh.100 could buy in January 2009 can only buy 50percent of that now,” said the statement from Amana Capital, the firm behind the report.
On Wednesday, Reuters reported that the Kenya shilling weakened due to increased dollar demand from oil importers.
As at 0649 GMT, commercial banks quoted the shilling at 101.05/25 per dollar, compared with 100.95/101.05 at Tuesday’s close.
However, the Amana Capital report indicates that the shilling should actually be trading at approximately 131 per dollar.
The study says devaluation of purchasing power is at 50percent, meaning that the figures presented by CBK may not represent the current circumstances of the economy.
The study further warns that the country faces a risk of pushing exporters to seek other alternatives since Kenyan products may become too expensive for them in the short run.
Export earnings will then decrease and the Kenyan economy may slow down significantly.
Last year, CBK Governor Patrick Njoroge locked horns with the International Monetary Fund (IMF) after they issued a report saying the shilling was overvalued by 17.5percent.
Njoroge accused IMF of ‘miscalculation’ and using the Kenya shilling as an ‘experimentation tool’.
On Wednesday, Reginald Kadzuty, Amana Capital’s Chief Investment Officer, said their report studied six factors contributing to the performance of the economy.
These include debt, balance of trade, employment, fiscal policy, currency and interest rates.
The report further notes that the country’s Ksh.5.2trillion debt has shifted from being productive to unproductive and Kenyans risk being taxed even more.
“In 2018, for every Ksh.100 of tax collected, Ksh.25 went to paying interest on debt and as at June 2018, for every Ksh.100 in revenue, Ksh.34 was used to service total debt obligations,” the study said.
For Citizen TV updates
Join @citizentvke Telegram channel
Video Of The Day: Heavy Obstetric Fistula burden for West Pokot County
[ad_2]
Source link
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]