Kenya’s government has announced plans to tackle the country’s USD exchange rate crisis, with the balance of trade and delayed debt payments set to be the key instruments used.
Energy Minister Davies Chirchir is spearheading efforts to restructure the fuel supply chain and bring down the pressure on the shilling, with hopes of reaching an exchange rate of Ksh85 to the dollar.
However, economist Churchill Oguttu has warned that the restructuring of the oil supply chain alone may not be enough to achieve this target, as other factors also contribute to exchange rate dynamics.
Kenya’s useable foreign exchange reserves have fallen below statutory requirements, causing significant pressure on the currency.
To combat this, the government is seeking a year-long moratorium on imported oil payments, notifying importers and their suppliers of payments due.
While the plan is a step in the right direction, experts suggest that a comprehensive approach may be necessary to fully address the underlying issues behind the exchange rate crisis.
