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{
    "id": 565591,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/565591/?format=api",
    "text_counter": 315,
    "type": "other",
    "speaker_name": "",
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    "speaker": null,
    "content": "Bank of Kenya (CBK) to support the exchange rate stability include, for example, maintaining the inflation rate, which was at 6.8 per cent as at May this year. It also includes a tight monetary policy. The CBK has been adopting that policy to make sure that the CBK rate remains at between 8.5 to 9 per cent as at June this year. The idea of this is to ensure that there is less likelihood of more liquidity, so that it encourages more inflation. Mr. Temporary Speaker, Sir, there are also other policy measures by the CBK. For example, there has been direct sale of dollars to try and also mitigate against the falling of the currency. In the last six months – between January and June this year – the CBK has sold US$734 million to try and reduce the pressure on the shilling. At the same time, the CBK has also built up the usable falling exchange reserves to cushion against short-term shocks. For example, the foreign exchange reserves currently stand at US$6.745 billion. This is at least four-and-a-half months import cover. Those are some of the measures that the CBK is taking. Many of the other measures are listed and the Member has a copy. Mr. Temporary Speaker, Sir, the Senator also sought to know the impact of depreciation on the foreign loans repayment programme. The Government Medium Term Debt Management Strategy ensures that the budget for external debt repayments considers unforeseen risks in the international environment, which could have implications. Consequently, the moderate level of depreciation is factored in the projections when developing the external debt repayment schedule. In general, that means that with regard to the foreign exchange, there are provisions to guard against significant fluctuations. This is already factored in the loan programme. Mr. Temporary Speaker, Sir, the Senator wanted to know what plans the Government has to hedge our foreign borrowings against adverse exchange rates in future. The Government Medium Term Debt Strategy ensures that external finances are used only to finance development expenditure. This is one of the things that the Government has developed as a policy. For example, the loans that have been taken externally have been used strictly to finance infrastructure development, like the railway and so forth, which enhances the capacity of the country for the future. Mr. Temporary Speaker, Sir, the Government Medium Term Debt Strategy also ensures that the public debt is maintained at sustainable levels. Therefore, external debt is contracted strictly on concessionary terms from the bilateral organizations like International Monetary Fund (IMF) and so forth, to ensure that we are not exposed to these shocks on the foreign exchange. I will stop there and see whether the Member is satisfied."
}