CBK Governor Dismisses Fears of Kenyan Shilling Falling to Ksh 150

Dr. Kamau Thugge stated in his address to the Monetary Policy Committee (MPC) that the Central Bank of Kenya (CBK) does not anticipate any downward pressure on the Kenyan shilling's exchange rate by the end of the year, despite global market uncertainties and speculation about a potential weakening of the shilling. Appointed by President William Ruto, Thugge focused on stabilizing the Kenyan shilling. In 2024, he was named Central Bank Governor of the Year in Africa by African Banker magazine. Thugge explained that Kenya recorded a balance of payments surplus last year and expects to achieve similar surpluses in 2026 and 2027. Thugge noted that continued capital inflows are strengthening the country's foreign exchange position. “I have already explained that the balance of payments showed a surplus last year and is expected to show a further surplus this year and next. Therefore, we do not anticipate any pressure on the exchange rate and expect the stability of the shilling to continue for the remainder of the year,” the governor stated. The statement that Kenya recorded a balance of payments surplus in 2025 and that this is also expected to be the case in 2026 and 2027 is partially correct, but it requires an important distinction between the overall balance of payments and the current account. The overall balance of payments showed a surplus in several quarters in 2025. Examples from official reports (Kenya National Bureau of Statistics – KNBS and Central Bank of Kenya – CBK): - Q2 2025: Surplus of approximately KSh 157 billion. - Q3 2025: Surplus of approximately KSh 63.7 billion. - For the full year 2025, the CBK projected a surplus supported by strong capital inflows despite a persistent current account deficit. However, the current account was consistently in deficit throughout 2025 – and at times significantly so: - Q2 2025: Deficit of approximately KSh 83.7 billion. - Q3 2025: Deficit of approximately KSh 135.3 billion. - Annual forecasts indicated a deficit of approximately 1.3–2.3% of GDP. For 2026 and 2027: The CBK and analysts continue to expect the overall balance of payments to be in surplus, as capital and financial account inflows more than offset the current account deficit. According to current forecasts, the current account will remain as projected by the IMF in October 2025: approximately -3.4% of GDP in 2026; -4.1% in 2027. Trading Economics is similar; the S&P 500 average is approximately -2.0% from 2025 to 2028, clearly negative. A current account surplus is not foreseeable, as Kenya remains structurally import-heavy despite improvements in exports and services. In summary, Kenya will achieve an overall balance of payments surplus in 2025, leading to increased foreign exchange reserves and strengthening external stability. No, there was no current account surplus – it remained in deficit, which is the main reason for the common term "balance of payments deficit" in many media reports. If "balance of payments" specifically refers to the current account, the statement is incorrect. It is correct, however, when referring to the overall balance of payments.

https://www.kenyans.co.ke/news/120704-cbk-governor-dismisses-fears-kenyan-shilling-falling-ksh150-stable-cash-flows https://www.imf.org/en/publications/weo https://bipartisanpolicy.org/report/deficit-tracker/