Kenya is on the verge of a financial crisis, according to former Trade Cabinet Secretary Moses Kuria, who warned that the shilling could drop to an all-time low of Ksh170 against the US dollar within the next 19 days. Kuria emphasized that this drastic decline could happen if crucial funds loaned to Kenya from the International Monetary Fund (IMF) are delayed.
Central Bank of Kenya (CBK) Governor Kamau Thugge recently mentioned that the country is expecting more than Ksh181 billion from the IMF. This sum is essential to keeping the shilling stable and preventing further economic damage.
In an interview on Citizen TV, Kuria highlighted Kenya’s growing dependence on international financial institutions like the IMF and World Bank, especially after the public backlash against the Finance Bill 2024. He noted that President William Ruto’s diplomatic efforts are crucial for maintaining Kenya’s relationship with these global lenders.
Kuria did not hold back on the urgency of the situation. He warned that if the IMF does not release the funds by the end of the month, the shilling could spiral to an unprecedented rate of Ksh170 to the dollar. “The president must leverage his political influence on the global stage, which he has done effectively so far,” Kuria said, underlining the tightrope the government is walking.
Looming Financial Crisis if IMF fails to Intervene
All eyes are now on John Mbadi, the new Cabinet Secretary for Treasury, whom Kuria identified as a crucial figure in managing this financial crisis.
Kuria explained that Mbadi’s top priority is to ensure that the IMF remains engaged with Kenya. If the expected $1.4 billion (about KSh181.3 billion) is not secured, it could have severe consequences for the shilling.
“If the IMF doesn’t come through by the end of this month, we could see the shilling hit Ksh170,” Kuria cautioned.
The former Trade CS added that he is hopeful Mbadi will succeed in keeping the IMF on board. And added that Mbadi needs prayers, grace, and luck, if he is to succeed.
Governor Thugge also highlighted the importance of these funds, revealing that Kenya is expecting an additional $600 million (around KSh77.7 billion) from the IMF following a recent review.
“We still have roughly $1.4 billion of disbursements from the IMF between now and the end of the financial year,” Thugge said.
These funds are critical as Kenya faces the economic fallout from recent protests and widespread opposition to the Finance Bill.
The next few weeks will be crucial, with the IMF’s support playing a key role in determining the country’s financial stability.
By Vivian K.