Kenyan President William Ruto speaks during a press conference in Nairobi, Kenya, 5 September 2022. (Photo: EPA-EFE / Daniel Irungu) READ: Meet the Contenders Vying to Become Kenyan Central Bank Governor
Thugge, 57, is a member of Ruto’s council of economic advisers. He served as the Treasury’s principal secretary from 2013 until 2019, when he was arrested following a probe into alleged irregular payments for a dam construction project. Thugge denied wrongdoing and the public prosecutor withdrew charges against him.
Thugge previously worked as a senior economist and deputy division chief at the International Monetary Fund. He obtained a masters degree and a PhD in economics from Johns Hopkins University.
With the new governor’s appointment, the top leadership of the central bank will be overhauled. In March, the lawmakers approved Ruto’s pick of Susan Jemtai Koech as deputy governor. Another deputy and a new chairman of the board of directors are set to be named to replace those whose terms are expiring too.
Currency, Inflation Pressure
The new governor will need to stabilize a currency that’s weakened about 10% this year, as part of measures to slow inflation that has been fueled by drought-fanned food prices and the cost of energy. The depreciating shilling has contributed to keeping inflation above the central bank’s target-range of 2.5% to 7.5% since June last year.
Kenya, like other African peers, has had to contend with domestic and external pressures, including the fallout from the coronavirus pandemic and Russia’s invasion of Ukraine. The risks contributed to monetary policy committee to increase the benchmark interest rate to 9.5% in March from 7.5% in May 2022.
The International Monetary Fund forecasts Eastern Africa’s second-largest economy will grow 5.3% this year. The expansion slowed to 4.8% in 2022 from a revised 7.6% the previous period, according to the nation’s statistics agency.
The nation’s foreign reserves have dwindled over the past year, standing at $6.5 billion or adequate to cover 3.6 months of import cover as of May 11, according to information from the central bank.
Moody’s Investors Service lowered Kenya’s credit rating by a notch to B3, six levels below investment grade, putting it on par with Mongolia and Angola.