IMF rate-capping law
IMF rate-capping law
Description
The International Monetary Fund (IMF) wants the law capping interest rates abolished to stimulate growth.
In a controversial statement that is likely to rekindle the debate that preceded the passage of the Banking (Amendment) Act 2016, IMF claimed interest rate controls are likely to curtail growth. Although the adverse effects of the controls are manageable in the near-term, if maintained, they could potentially pose a risk to financial stability. Therefore, it is essential to remove these controls while taking steps to prevent predatory lending and increase competition and transparency of the banking sector, said Deputy Managing Director and Acting Chair of IMFs' Executive Board Tao Zhang in a statement Thursday.
Mr Zhang said although the overall macroeconomic outlook is positive, with the country experiencing robust growth and reduced external imbalances, interest rate controls are likely to reduce access to credit, weighing on growth. The IMF's Executive Board has completed the first review of Kenya's performance under a program supported by the Standby Arrangement (SBA) and an Arrangement under the Standby Credit Facility (SCF).
The effects of the Banking (Amendment) Act 2016, which was signed into law in September, are yet to be known. However, there have been indications that banks have started cherry-picking borrowers as a safeguard against risky borrowers. Data from the Central Bank of Kenya (CBK) showed that while loan applications increased dramatically following the enactment of the law, lenders did not approve most of them.
CBK, however, denies suppressed loan approvals are linked to the interest rate capping regime. We have been monitoring and we have not got conclusive evidence. The sense is that lending has been curtailed to some sectors that were getting loans at much higher rates. In that sense, it is still not conclusive because banks are trying to accelerate their SME lending. We need to look at the data carefully, CBK Governor Patrick Njoroge was quoted as saying by Bloomberg
What People Say
We have been clients of the firm for over 10 years and we appreciate the personal service we get from the team. They are always available and approachable. The services we use are personal and corporate tax planning, Bookkeeping, and Auditing. They are often the first professionals we turn to when we are looking at something new.
Antony has assisted us over the years in keeping to the various deadlines that businesses need to keep to. He has advised and assisted us with Tax and business planning ideas, I would highly recommend EKV.
Evans Kakai and his team are very professional, thorough, proficient, and knowledgeable. They take time to explain matters that may be unclear and they were very flexible in scheduling.
I have had the pleasure to work with the team at EKV over the past 7 years. Every audit engagement has been completed in a very professional and organized manner. They have always provided extreme, helpful feedback and guidance throughout the years. I strongly endorse the work done by EKV .
As a new client of EKV, my team and I are delighted with the audit services EKV performed for our organization.
EKV has been our advisor now for many years and we have built a very close working relationship. We feel this is key to us receiving proactive information for our business. I would recommend EKV as they provide a professional and timely service.
I would like to thank EKV for their recent diligent work and for honoring the scope of work. I am also amazed at the tax strategy they have implemented over the last years
Ekv looked in detail at my accounting needs and helped me choose the solution that is best for me which is QuickBooks. I am very pleased with the input I have received from EKV and would recommend their services.
The advice and experience offered by EKV have been of value to us. The team is super supportive, accurate, and professional.
EKV International Consultants Limited has been extremely helpful in assisting us with our strategic business planning and I would highly recommend Mr. Kakai and the firm should you need tax planning advice.
We value EKV & ASSOCIATES as our advisors and accountants. They prepare our accounts, company and personal tax matters and the service is always good and timely. We feel we can pick up the phone on them whenever we need to discuss business matters.
We moved our audit and tax work to EKV 5 years ago and since then their support to us has been valuable and their team are brilliant to work with. They are responsive, proactive, and supportive and we value the relationship we have built up.
EKV has been a huge help to our business since we have worked with them for over 10 Years. They are a really friendly and professional team and are always quick to respond. They take the stress out of our accounting needs.
EKV Associates really helped us achieve our financial goals. The slick presentation along with fantastic readability ensures that our financial standing is stable.