Kamau Thugge will begin his term as Kenya’s central bank governor today. Photo: Boniface Okendo, Standard

Kamau Thugge, the principal secretary of Kenya’s Finance Ministry, will begin his term as the governor of the Central Bank of Kenya.

Thugge faces an economy struggling with currency depreciation, inflation and a heavy debt load. Currently, Kenya’s foreign reserves have fallen to their lowest numbers in eight years while the shilling has lost 27% of its value since 2020.

The dip in foreign reserves is largely due to efforts at reining in the devaluation of the shilling as well as repayments of loans to bilateral and commercial lenders. Economic growth in Kenya slowed to 4.8% in 2022, down from 7.6% in 2021. Since last September, Ruto’s government has taken steps to revitalize the market and stabilize the exchange rate. Despite slower growth than expected, improvements in the agriculture sector have contributed to an expected growth rate of 5.0% this year, according to the World Bank.

Under Thugge’s leadership, Kenya’s central bank is expected to pursue a tighter monetary policy in the form of interest rate hikes beyond the current lending rate of 9.50%. To address the devaluation of the shilling, which has raised the price of imports, Thugge will likely draw funds from foreign reserves as a short-term solution.