In June 2024, Kenyans working abroad sent home the least amount of remittances in 14 months, with inflows hitting $371.6 million (Sh47.9 billion), down from $404.4 million (Sh52.2 billion) in May. This decrease is partly attributed to concerns over the Finance Bill, 2024, which proposed a 16% VAT on telegraphic money transfer services and foreign exchange transactions. President William Ruto ultimately rejected the bill after public protests that resulted in significant casualties and property damage.
Despite the decline in June, the 12-month cumulative remittances up to June remained strong at $4.53 billion (Sh583.4 billion), a 12.9% increase from the previous year. The Central Bank of Kenya noted that remittances continue to support the current account and the foreign exchange market. The US remains the largest source of remittances, contributing 54% in June 2024.
Additionally, Kenya’s forex reserves dropped to $7.4 billion (Sh954.6 billion), breaching both national and regional import cover thresholds. This decline is likely due to the National Treasury using a substantial amount of US dollars to clear a Eurobond debt. Economist William Kimotho highlighted that the drop in forex reserves, despite increased export earnings and remittances, suggests that reserves were utilized for Eurobond repayment. This situation has impacted the Kenyan shilling, which depreciated against the US dollar.
The country’s money market activities also saw low performance, with the Treasury bills auction underperforming and the Treasury bond auction receiving less than half of the advertised bids. Interest rates on Treasury bills remained stable.
