The International Monetary Fund has imposed regulations that limit interest rates on loans in Kenya. The new law is expected to accelerate the country's economic growth rate this year. The charges would lower the rate by 0.8 percent. The president of Kenya moved the rate, which has stayed at 10.5 percent, through Kenya's parliament in mid-September last year (Njenga, 29).However, the legislation has been met with various protests from Kenya's central bank as well as other stakeholders, including the country's financial sector. Due to the hiked interest rates before the new law, many Kenyans could not access their credits cheaply, which had made them went through certain inconveniences. Since the enactment, the projection of the domestic product of the country is likely to improve from 5.3 to 6.1 percent. As the interest rates affect the rates of the economic growth, it is important to note that middle-sized, as well as small-sized businesses of the country, could not access the credit facilitates, thus limiting the rate of growth in GDP. The report praised Kenya for sticking to target the spending rates.
Conclusion
Unlike other economic hubs in the continent, Kenya has been facing the slow economic growth in recent past due to the reduced rate which in a long run affects the rates of tax collection in the country. Unlike the past, IMF has granted the country a larger funding amount of about $1.5 billion. The institution helps the country as it is one of the largest economies in the continent. The technical support plays an important role in upgrading the country's financial policy as well.
Works Cited
Njenga, Grace W. The Relationship between Select Macroeconomic Variables and Loan Default
Rate in Kenya. University of Nairobi, 2016.
