It is now a month since the first COVID-19 case was reported in Kenya. Ever since a lot has happened in a bid to contain its spread. People have adopted new ways of carrying out their day to day activities. The economy of the country has significantly been affected since more resources have been directed to fight the spread of the deadly virus. Indeed business plans have been interrupted; many people have lost their jobs and consequently their livelihoods. To many people, this has become the new normal.
The situation keeps worsening as the number of confirmed cases in Kenya keep increasing. According to the report given by the Ministry of Health as at 13-04-2020, the number of confirmed cases stood at 208 from which 40 recoveries and 9 deaths were reported. The government has rushed to assemble economic stimulus packages to cushion the effects brought up by the public health issue at hand as they prepare for the looming economic recession.
Before implementing any fiscal and monetary policies, the government should ensure that people are safe to go to their places of work. Notably, Kenya’s Gross Domestic Product, GDP will indeed reduce and the Central Bank of Kenya, CBK has, as a result, lowered their projections from the initial estimate of 6.4%, with the overall growth projection revised downwards to between 1.4%-1.8% way from 5.7% as at the start of the financial year.
The Kenyan Shilling has been depreciating against the US Dollar at an alarming rate with the exchange rate market at 1 U.S Dollar = 105.9000 Kenya Shillings as at 13-04-2020. On the other hand, the CBK also projects the inflation rate of between 2.5% to 7.5% which is mainly due to increased prices of food products. Cost-push inflation is expected due to the Coronavirus global pandemic from the supply side inadequacies forced by restrictions in movement, closure of businesses and lockdowns which have disrupted the supply chains.
The government of Kenya with the help of the CBK announced both monetary and fiscal policies to cushion the citizens and the economy during this pandemic. Among the fiscal policy measures announced include directing the Kenya Revenue Authority, KRA to pay all the verified VAT claims amounting to KES 10 Billion, directing all government departments and ministries to pay all the KES 13 Billion pending bills and voluntary salary cut for senior ranks in the executive arm of the government with the president and his deputy offering 80% of their salary. Monetary policies proposed were to release money (KES 7.3 bn) gained from the demonetarization exercise done last year to the National Treasury and reduction of both the Cash Reserve Requirement (CRR) and Central Bank Rate (CBR) by 1% from 5.25% and 8.25% respectively.
Besides all other measures, the government has also established COVID-19 Emergency Response Team tasked to mobilize resources for emergencies in the fight to combat the spread and effects of COVID-19 pandemic.
The government should not relent in implementing policies that enhance public health to ensure the safety of its citizens from the deadly virus which has claimed many lives globally. A healthy nation is a wealthy nation. We encourage our readers to stay safe during this pandemic.
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