In what is a pointer to the dire straits in which the National Treasury is in, the board of the Central Bank of Kenya (CBK) has approved a Ksh5 billion cash transfer from its general reserve fund to the government’s consolidated fund service.
In a statement, the CBK said the transfer was approved in view of “…the very exceptional circumstances caused by an unprecedented global pandemic that have put a strain on government’s resources…”
According to a report by business daily, the reserve bank has so far given the government Ksh.14.8 billion since last year, including a Ksh.2.5 billion dividend on the results for the year ended June 2020 and Ksh.7.3 billion gained from the cancellation of the old 1000 shilling notes.
The move comes at a time when the government is facing a widening budget deficit in the wake of revenue shortfalls.
But speaking to Metropol TV, George Bodo, an economic commentator and Sub-Saharan Africa banking sector analyst, however, said the parliament should now consider amending the CBK Act to allow the Treasury to access higher overdrafts with longer repayment terms from the CBK in view of the government’s current fiscal position.
“The CBK can’t fund the government in dire situation but this is not the right way. The govt has an overdraft facility. At this moment parliament should amend the CBK act to increase th e overdraft limit to increase the amount the govt can access, they could double it based on what the parliament thinks is appropriate at this time.” said Bodo.