The Central Bank of Kenya Governor Patrick Njoroge has warned Kenyans to brace for tough times ahead as the country moves into a deep economic hole due to the global coronavirus pandemic.
The CBK says economic growth has now officially come to a slump.
“As a result of the pandemic, economic growth is expected to decline significantly in 2020 from a baseline estimate of 6.2 pc to possibly 3.4pc, arising from reduced demand by Kenya’s main trading partners, disruption of supply chains and domestic production,” said Njoroge in a statement.
Some of the sectors that are suffering in the country include tourism, aviation and export markets, which rely heavily on the foreign markets.
The shilling has also hit a record low of Sh106.5 against the dollar due to the reduced inflow of foreign exchange reserves.
“The foreign exchange market has recently experienced some volatility largely due to uncertainties concerning the impact of Covid-19 and a significant strengthening of the dollar in the global markets,” said Njoroge.
In an effort to help the cash strained government last week CBK injected 7.4 billion into treasury to help deal with the effects of the virus.
This is the cash that was rendered worthless after its holders failed to beat the September 30, 2019 deadline to exchange them with new Sh1, 000 notes.
The CBK says it has assembled a good amount of its monetary arsenal as it is ready to pump more cash into the economy, further CBK’s Monetary Policy Committee (MPC) has lowered the Central Bank Rate (CBR) and slashed the cash reserve ratio (CRR) both by 1pc a move Dr Njoroge says would release Sh35.2 billion in additional liquidity into the economy.
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