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CBK's CBR shocker @ 16.5% - Playing Serious Hard Ball?!
Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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It's your chance to ask the expert questions. Read what he says and question his logic. http://blogs.worldbank.org/africacan/node/2041
http://blogs.worldbank.org/africacan/blog/71“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 1/27/2011 Posts: 1,777
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Mwalimu wrote:Untill we replace 'made in china'(plates, cups, roads, electronics etc)
with 'made in kenya' exchange rate remains high true mwalimu.
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Rank: Veteran Joined: 7/8/2008 Posts: 947
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Scubidu wrote:tony stark wrote:Why don't they just issue a foreign bond.
Whatever our rating currently is he would still be able to get a cheaper rate without killing domestic borrowing and the economy.
Even with the greece default cloud hanging over our heads I am sure he would still be able to raise the money because everyone is holding on to cash and the other investments avenues are all very grim.
Issue a foreign bond(get you dollars), reduce the CBR(encourage domestic growth) increase import duties on non manufacturing, processed consumables(I know this is not CBK role but should be plan of the strategy, stop listening to world bank or IMF! Never listen to them f***ing devils! It's not easy to do this! Scubidu choosing the easier option is more often than not the wrong option ... in fact nearly always! Why shouldn't Kenya not raise the funds through the bonds market. In fact cut out the middle man because world bank and soon IMF already raise funds through bonds market. We seriously need to grow some balls. I dont care what people say I would rather a CBK governor make the wrong decision thinking it right than let IMF and world bank dictate what to do.
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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tony stark wrote:Scubidu wrote:tony stark wrote:Why don't they just issue a foreign bond.
Whatever our rating currently is he would still be able to get a cheaper rate without killing domestic borrowing and the economy.
Even with the greece default cloud hanging over our heads I am sure he would still be able to raise the money because everyone is holding on to cash and the other investments avenues are all very grim.
Issue a foreign bond(get you dollars), reduce the CBR(encourage domestic growth) increase import duties on non manufacturing, processed consumables(I know this is not CBK role but should be plan of the strategy, stop listening to world bank or IMF! Never listen to them f***ing devils! It's not easy to do this! Scubidu choosing the easier option is more often than not the wrong option ... in fact nearly always! Why shouldn't Kenya not raise the funds through the bonds market. In fact cut out the middle man because world bank and soon IMF already raise funds through bonds market. We seriously need to grow some balls. I dont care what people say I would rather a CBK governor make the wrong decision thinking it right than let IMF and world bank dictate what to do. You're right. Latest vibe ive heard is that the governor is struggling with domestic borrowing programme to the extent that an increase in VAT is being proposed as a solution. Even at this point CBK can't print money because of IMF programming. The above tax measures seem to be consistent with the way IMF works (see the conclusion of the article in link below). They're between a rock... http://www.brettonwoodsproject.org/art-567716“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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I have said it here before, the IMF is now in charge of Kenya's monetary & fiscal policy and what you will see going forward are nothing but austerity measures, i support the current squeeze...i think we will see one more rate hike from the IMF before year end!
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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the deal wrote:I have said it here before, the IMF is now in charge of Kenya's monetary & fiscal policy and what you will see going forward are nothing but austerity measures, i support the current squeeze...i think we will see one more rate hike from the IMF before year end! My friend the IMF and world bank that you support have a mandate to destroy emerging economies with conditional loans so as to maintain their country's own exploitational interests... The sooner we realise this the quicker we can tell them to shove their loans up where the sun dont shine.. Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 6/17/2009 Posts: 1,619
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The focus was on infrastructure from 2008 onwards... building it through public spending. Because we failed to do the Eurobond in 2007 (under Kimunya) the only recourse was to fund the current account with IMF funds. Don't you agree?[/quote]
It seems GoK wants to go ahead with the Eurobond in the current fiscal year to ease the hard currency crunch,is this the right environment to do it?,will it find takers or at reasonable yields.http://af.reuters.com/article/kenyaNews/idAFL5E7MO3P520111124
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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3Q 2011 Current Account deficit at 577 Billion Shilling if CBR was not hiked the Shilling could be at 120 to the USD by now
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Rank: Veteran Joined: 7/8/2008 Posts: 947
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Scubidu wrote:tony stark wrote:Scubidu wrote:tony stark wrote:Why don't they just issue a foreign bond.
Whatever our rating currently is he would still be able to get a cheaper rate without killing domestic borrowing and the economy.
Even with the greece default cloud hanging over our heads I am sure he would still be able to raise the money because everyone is holding on to cash and the other investments avenues are all very grim.
Issue a foreign bond(get you dollars), reduce the CBR(encourage domestic growth) increase import duties on non manufacturing, processed consumables(I know this is not CBK role but should be plan of the strategy, stop listening to world bank or IMF! Never listen to them f***ing devils! It's not easy to do this! Scubidu choosing the easier option is more often than not the wrong option ... in fact nearly always! Why shouldn't Kenya not raise the funds through the bonds market. In fact cut out the middle man because world bank and soon IMF already raise funds through bonds market. We seriously need to grow some balls. I dont care what people say I would rather a CBK governor make the wrong decision thinking it right than let IMF and world bank dictate what to do. You're right. Latest vibe ive heard is that the governor is struggling with domestic borrowing programme to the extent that an increase in VAT is being proposed as a solution. Even at this point CBK can't print money because of IMF programming. The above tax measures seem to be consistent with the way IMF works (see the conclusion of the article in link below). They're between a rock... http://www.brettonwoodsproject.org/art-567716 At last Kenya to issue a eurobondThey are aiming to raise 500million dollars ha! they should be more ambitious but this is still better than parting our ass for IMF to have their way with.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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the deal wrote:I have said it here before, the IMF is now in charge of Kenya's monetary & fiscal policy and what you will see going forward are nothing but austerity measures, i support the current squeeze...i think we will see one more rate hike from the IMF before year end! Your thoughts were right on point as MPC today raises the CBR by 150 basis points. I will be looking for the full statement for more information. At first glance, it appears MPC is simply matching the increase in inflation. We should then expect them to start the easing cycle with the expected decrease in inflation. However, isn't there a risk that the increase in CBR may itself contribute to an increase in inflation? Talk of the medicine being almost as debilitating as the disease. Wont it kill the patient?
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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mwanahisa wrote:the deal wrote:I have said it here before, the IMF is now in charge of Kenya's monetary & fiscal policy and what you will see going forward are nothing but austerity measures, i support the current squeeze...i think we will see one more rate hike from the IMF before year end! Your thoughts were right on point as MPC today raises the CBR by 150 basis points. I will be looking for the full statement for more information. At first glance, it appears MPC is simply matching the increase in inflation. We should then expect them to start the easing cycle with the expected decrease in inflation. However, isn't there a risk that the increase in CBR may itself contribute to an increase in inflation? Talk of the medicine being almost as debilitating as the disease. Wont it kill the patient? It was either this or the Kenyan economy would have crashed hard!
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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The next thing now is for CBK to suspend all T-Bill and bond auctions for the year and push for the Euro bond.
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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guru267 wrote:
The sooner we realise this the quicker we can tell them to shove their loans up where the sun dont shine..
I don't think it is that easy. These guys have developing countries in a choke hold. Tutaanza kutafutiwa mashida... GOD BLESS YOUR LIFE
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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the deal wrote:The next thing now is for CBK to suspend all T-Bill and bond auctions for the year and push for the Euro bond. Explain how this is possible and how will this help the current situation. To a layman's level of understanding please, dont use graphs and pie charts.  Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Member Joined: 10/29/2009 Posts: 40
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CBK has been failing with respect to monetary policy for almost a year now, but most importantly, there is no theoretical link between the causes of inflation and interest rates, and therefore it is no wonder that the increases in the CBR will have many more undesirable consequences than deal with rising inflation. That said, I would not favour a Euro-bond-given our balance of payments position- which is anything from favourable. The answer lies in pursuing mixed economy policies. Manage credit to certain sectors, restructure OMO and reduce inter-mediation role of banks and craft out a set of new taxes-particularly capital gains tax etc. There is no reason to stifle credit to industry in light of the high levels of unemployment in the economy.
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Rank: Member Joined: 6/21/2010 Posts: 514 Location: Nairobi
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tutebeng wrote:CBK has been failing with respect to monetary policy for almost a year now, but most importantly, there is no theoretical link between the causes of inflation and interest rates, and therefore it is no wonder that the increases in the CBR will have many more undesirable consequences than deal with rising inflation. That said, I would not favour a Euro-bond-given our balance of payments position- which is anything from favourable. The answer lies in pursuing mixed economy policies. Manage credit to certain sectors, restructure OMO and reduce inter-mediation role of banks and craft out a set of new taxes-particularly capital gains tax etc. There is no reason to stifle credit to industry in light of the high levels of unemployment in the economy. Restructuring OMO will be the best thing. Increasing the CBR is a double edged sword coz though theoretically inflation is being driven out, status quo remains as its replaced by increased lending rates lumped on consumers. Blame is not only on Ndung'u but guys at FinMin as well. Why not instead of only the 100% ID on new investments they add an incentive of lets say 20% Corporate tax for 3-5yrs for new FDI's China style and reduce the number of licences required + create a one stop shop for the same sort of the IPC but on a grander scale like other countries economic centres. I think with this we'll attract more FDIs and get the Forex we really yearn for, create the much needed employment, if manufacturing firms set up shop we'll partly have reduced our imports etc. What MPC is doing is basically killing SMEs who have been as of recent the economic drivers and employers. 'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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Rank: Member Joined: 10/29/2009 Posts: 40
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Erifloss
You are spot on,that the measures being undertaken will kill SMEs' this unfortunately is one thing the planners seem to ignore, however unless policy is focused on employment then the other economic indicators would be difficult to give relevance. The Chinese have been doing some interesting things on economic policy, when growth was threatened they eased monetary supply,and their approach to investments is more welfare enhancing than anything we are doing.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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tutebeng wrote:Erifloss
You are spot on,that the measures being undertaken will kill SMEs' this unfortunately is one thing the planners seem to ignore, however unless policy is focused on employment then the other economic indicators would be difficult to give relevance. The Chinese have been doing some interesting things on economic policy, when growth was threatened they eased monetary supply,and their approach to investments is more welfare enhancing than anything we are doing. If the FinMin is on Ogambo list, expect the worst and hope for a better. Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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The problem is there are no real economists on Wazua or the Kenyan Investment scene in General...what i see are bankers/accountants/lawyers...etc...claiming to be economists/analysts...The Kenyan situation is very simple to solve...it requires a 3 pronged approach from the Min of Agric...Min of Fin and then CBK...
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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the deal wrote:The Kenyan situation is very simple to solve...it requires a 3 pronged approach from the Min of Agric...Min of Fin and then CBK... Nice to see you are finally changing your stance and recognizing other factors ran this economy besides the banking sector.. And FYI there are plenty of economists on wazua/ kenya.. Maybe even more than in Namibia.. Mark 12:29
Deuteronomy 4:16
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CBK's CBR shocker @ 16.5% - Playing Serious Hard Ball?!
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