Access to cheap loans from Commercial Banks could soon be a thing of the past for Kenyans seeking credit facilities.
This follows pressure on the Presidency by the International Monetary Fund (IMF) to either repeal or replace the law that controls interest rates.
Parliament passed the rate cap law in December 2016 which capped interest rate for banks at 14 per cent. The Bill was sponsored by Kiambu Township MP Jude Njomo.
If the rate cap law is scrapped, banks will once again have an upperhand in dictating the interest rate which could go to as high as 25 per cent like it was before the interest cap law took effect.
According to the Standard, the details of the changes are contained in the IMF’s status review on Kenya following a recent visit by top officials of the Washington-based institution.
In a meeting held between the officials led by IMF Chief of Mission to Kenya Benedict Clements and President Uhuru Kenyatta, they pushed for scrapping of the law to allow Kenya top continue accessing funding.
Kenya asked for a six-month period to review IMF’s conditions.
“The authorities requested a six-month extension of the IMF’s standby arrangement (SBA) that expires on March 13, 2018 to allow more time to complete the outstanding reviews of the IMF-supported programme,” read an end-of-mission statement by the IMF team as quoted by the Standard.
It also added: “”In support of this request, the authorities have committed to policies to achieve the programme objectives, including reducing the fiscal deficit and substantially modifying interest controls.”
Treasury Cabinet Secretary Henry Rotich, CBK Governor Patrick Njoroge, and the principal secretary for the National Treasury, Kamau Thugge, Deputy Governor of CBK, Sheila M’Mbijiwe, and other senior Government and CBK officials met the IMF delegation.
Should the law be scrapped, scores of Kenyans currently enjoying low interests rates on loans will have to readjust and come to terms with the new changes that may hand back power to the lenders.