CBK distance themselves from Gachagua’s Claims On Lack of Foreign Exchange Reserves

Written by on October 3, 2022

The Central Bank of Kenya (CBK) has responded to claims made by Deputy President Rigathi Gachagua that the country lacks enough foreign exchange reserves to import oil.

Speaking to Citizen TV on Sunday evening, Gachagua claimed that the country’s financial state is dire that there were no reserves to purchase oil from other nations.

“Tumekosa maneno ya Foreign Exchange hata jana pale katika benki kuu hakukuwa na zile pesa za kigeni za kutosha kuagiza mafuta kutoka nchi za nje (We have lacked foreign exchange, even yesterday there was no enough forex at Central Bank to buy oil from foreign countries),” Gachagua said.

In a quick rejoinder, CBK distanced themselves from Gachagua’s comments, clarifying that they do not supply requisite foreign exchange and that all foreign exchange for private transactions is obtained from commercial banks.

“CBK does not supply foreign exchange for transactions other than for the National Government (i.e., government’s own imports or debt service payments) or CBK’s operations. Oil importers, therefore, obtain their requisite foreign exchange from the commercial banks and not CBK,” wrote CBK in a statement.

They further stated that CBK’s foreign exchange cover remains adequate and that they will they will continue to cushion foreign exchange markets in the occurrence of shocks.

“The Central Bank of Kenya Act (Section 26) requires that CBK “at all times use its best endeavours to maintain a reserve of external assets at an aggregate amount of not less than the value of four months’ imports as recorded and averaged for the last three preceding years.” This stood at 4.64 months of imports as at September 26, 2022,” said CBK.

“The CBK foreign exchange reserves, therefore, continue to provide adequate cover and a buffer against shocks in the foreign exchange market.”

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