Treasury CS John Mbadi addressing the general public and journalists during a press briefing at the Treasury building on February 13, 2025/DOUGLAS OKIDDY
The National Treasury has projected an additional Sh50 billion in circulation following the decision to lower both the Central Bank Rate (CBR) and banks' reserve ratios.
This is part of the government's plan to release money into the pockets of citizens who are complaining of a tough economy despite state data indicating a drop in the cost of living.
Kenya’s headline inflation rose slightly to 3.3 per cent in January to a four-month high from three per cent in December 2024, still below the Central Bank of Kenya’s (CBK) midpoint target of five per cent for the eighth consecutive month.
Addressing the media in Nairobi, the National Treasury boss John Mbadi said that they expect the cheaper credit to rejuvenate the economy, creating more job opportunities and inspiring confidence in the economy, nursing the impact of local and international pressures witnessed for the better part of 2024.
Last week, the Central Bank of Kenya’s Monetary Policy Committee (MPC) slashed the benchmark rate by 50 basis points to 10.75 per cent and the cash reserve ratio to 3.25 per cent from 4.25 per cent.
Mbadi hailed banks for rushing to pass the benefit to consumers, with Equity Bank cutting by three per cent while Co-op Bank, I&M and KCB have reduced their average lending rates by two per cent.
He added that the cabinet has directed the National Treasury to source funds to pay pending bills once the verification team completes its work by the end of March.
The issue of pending bills continues to taint the government's image while crippling businesses, hurting the overall economy.
"I want to report that we are working on this . Although the mandate of the verification team was extended slightly due to the bulky nature of the documents, companies owed will be paid promptly."
As of June 30, 2024, the national government of Kenya recorded pending bills amounting to Sh516.2 billion.
Government Ministries, Departments, and Agencies (MDAs) cumulatively owed Sh136.5 billion in unsettled bills, which was 26 per cent of the total pending bills.
Pending bills in recurrent expenditure by MDAs was 20 per cent of the total pending bills and amounted to Sh100.7 billion
