Kenya Shilling ‘Too Stable,’ IMF Claims; KRA Boss Fires Back

The remarkable stability of Kenya’s shilling against the US dollar in the past year has now become the subject of high-level talks between Nairobi and the International Monetary Fund.

For most of 2025, the Kenyan shilling has traded around KSh129 per US dollar, supported by strong foreign exchange reserves, steady diaspora remittances, and prudent monetary policy by the Central Bank of Kenya (CBK). However, the IMF has expressed concern that the shilling’s consistent steadiness might be too stable, potentially distorting monetary policy transmission and complicating inflation management.

KRA Chair Ndiritu Muriithi Pushes Back Against IMF Concerns

Kenya Revenue Authority (KRA) chairperson Ndiritu Muriithi has openly challenged the IMF’s position, describing it as disconnected from the realities of developing economies.

“One of the things the IMF told us when they visited Nairobi two weeks ago was that they believed the exchange rate was too stable and was interfering with inflation. Personally, I thought it odd that the IMF would claim that the exchange rate is too stable,” Muriithi said on Friday, October 24, 2025.

He added, “They think that it is interfering with monetary policy transmission and inflation targeting. The tax-to-GDP ratio is a rule of thumb that should not be followed biblically.”

Muriithi’s comments captured growing tensions between Kenya’s economic managers and the IMF over what constitutes good currency management. The IMF wants to see more flexible exchange rates that reflect market forces, while for Kenyan authorities, the current stability is a hard-won economic gain that protects citizens from inflation and keeps investors confident.

IMF-Kenya Talks Enter Sensitive Phase

This debate comes at a delicate time as Kenya seeks a new funding arrangement with the IMF. The stability of the shilling is now a key talking point that could influence the structure and conditions of future financial support.

An IMF delegation led by Haimanot Teferra visited Nairobi from late September to early October to review Kenya’s macroeconomic performance and explore possible support under a new program. Although the IMF acknowledged progress in its discussions with Kenyan officials, it stopped short of announcing a staff-level agreement, which would be necessary before any disbursement of funds.

Apart from the currency issue, the IMF has also urged Kenya to tighten fiscal discipline, strengthen debt management, and enhance transparency in public spending, areas that remain under close scrutiny as the government navigates economic pressures and public debt concerns.

Local Economists Defend Shilling’s Stability

Despite external criticism, local analysts and business leaders have praised the CBK for maintaining currency stability amid global market volatility. According to CBK data, Kenya’s foreign exchange reserves stand at KSh1.560 trillion, equivalent to 5.3 months of import cover, a healthy buffer that supports the shilling’s value.

Strong diaspora remittances continue to play a critical role, providing consistent inflows that offset trade deficits and sustain market confidence. Economists claim that such stability allows businesses to plan effectively and insulates consumers against price shocks.

Fundamentally, the IMF’s unease underlines the deeper philosophical divide between global lenders and developing nations, a clash between textbook monetary theory and real-world economic resilience. For Kenya, defending the stability of the shilling may not just be an economic decision, but a statement of financial sovereignty.

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