Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

KENYA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 30, 1994.
Exchange Arrangement
CurrencyThe currency of Kenya is the Kenya shilling.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate is determined in the foreign exchange market. Foreign exchange bureaus are authorized to deal in cash and foreign traveler’s checks. The dollar is the principal intervention currency. The official exchange rate is set at the previous day’s average market rate and applies only to government and government-guaranteed external debt-service
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketCommercial banks are authorized to enter into forward exchange contracts with their customers at market-determined exchange rates in currencies of their choice. There are no limits on the amount or period of cover. For prudential purposes, commercial banks require approval from the Central Bank of Kenya (CBK) before introducing new forward contract products.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsKenya is a member of COMESA, the EAC, and RIFF.
Administration of controlThe Central Bank Act gives the CBK the power to license and regulate foreign exchange dealers.
International security restrictionsNo.
Payments arrears
OfficialEffective January 15, 2004, official debt arrears have been rescheduled with Paris Club creditors.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.r.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsA copy of the import declaration form, a final invoice, and a copy of the customs entry form must be submitted.
Preshipment inspectionAn inspection is required for all imports with an f.o.b. value of more than $5,000 or its equivalent. These are subject to inspection for quality, quantity, and price and require a clean report of findings. Banks are allowed to effect clean payments (for imports) provided they obtain a pledge from the importer to submit the documents at a later date.
Import licenses and other nontariff measures
Negative listThe list includes a few items for health, security, and environmental reasons.
Import taxes and/or tariffsNo.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirements
Export licenses
Without quotasCoffee, tea, and horticultural produce may be exported only if a sales contract is registered with the Coffee Board, Tea Board, and Horticultural Crops Development Authority, respectively. Exports of certain foods and agricultural products require special licenses to ensure adequate supplies in the domestic market. Exports of minerals, precious stones, and other essential strategic materials are also subject to special licensing.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsA minimum of 25% of the share capital of a listed company must be held by domestic investors.
Sale or issue locally by nonresidentsNo controls apply on the sale of securities by nonresidents. However, the issue of securities by nonresidents requires prior approval from the Capital Markets Authority (CMA).
Sale or issue abroad by residentsThe sale or issue of securities abroad by residents requires prior approval from the CMA.
Bonds or other debt securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsThe regulations governing securities of a participating nature apply.
Sale or issue abroad by residentsThe regulations governing securities of a participating nature apply.
On money market instruments
Sale or issue locally by nonresidentsNo controls apply on sales, but issuing money market instruments requires prior approval from the CBK.
Sale or issue abroad by residentsThe sale or issue of money market instruments abroad by residents requires prior CBK approval.
On collective investment securities
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsCBK approval is required for these transactions.
Sale or issue abroad by residentsCBK approval is required for these transactions.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsPurchases of real estate are subject to government approval.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Open foreign exchange position limitsForeign exchange exposure may not exceed 20% of an institution’s core capital.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadRetirement benefit schemes may invest up to 15% abroad.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsJanuary 15. Official debt arrears were rescheduled with Paris Club creditors.

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