IMF Questions Kenya’s Shilling Stability, Suspects Central Bank Intervention

The International Monetary Fund (IMF) has raised red flags over the Kenyan shilling’s unusual stability against the US dollar — hovering around Sh129 per dollar for nearly a year — even as global currencies fluctuate and Kenya’s external position improves.

According to IMF officials, the shilling’s steadiness may signal excessive intervention by the Central Bank of Kenya (CBK), potentially masking market realities and distorting key economic indicators such as inflation and debt sustainability. “Such prolonged stability is atypical in an open market economy,” said one IMF source familiar with the review discussions.

However, CBK Governor Kamau Thugge dismissed suggestions of manipulation, insisting that the stability reflects stronger fiscal discipline, improved forex reserves, and increased diaspora remittances. “We are not propping up the shilling — we’re supporting market efficiency,” he stated.

KRA Chairman Nderitu Mureithi echoed Thugge’s position, crediting revenue reforms and external inflows for creating confidence in Kenya’s macroeconomic framework.

Despite these assurances, the IMF remains cautious. The currency issue has reportedly delayed negotiations for a new bailout facility, with the Fund seeking more transparency on CBK’s forex operations and Kenya’s external debt data.

Analysts warn that while a stable shilling helps curb import costs and inflation, artificial support could backfire if reserves are drained or investor confidence wanes.

The debate underscores growing tensions between Kenya’s economic sovereignty and IMF conditionalities, as Nairobi balances debt management, inflation control, and political optics ahead of the 2027 elections.