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Kenya foreign exchange reserves hit U.S.
10.1 billion dollars on Eurobond proceeds

NAIROBI (Xinhua) -- Kenya’s foreign exchange reserves surged 26 percent last week as the country received proceeds from the 2.1 billion U.S. dollars Eurobond sales, the apex bank said on Monday.

The east African nation’s forex reserves rose from 7.98 billion dollars on May 23 to hit an all-time high of 10.06 billion dollars at the end of May, an equivalent of 6.4 months of imports cover, Central Bank of Kenya (CBK) said in its latest data.

Before the Eurobond cash, the reserves were on a downward spiral, declining from 8.1 billion dollars at the end of April to the two-year low of 7.98 billion dollars.

In the Eurobond issue, which was the third, Kenya raised 2.08 billion dollars in tranches of 7 years at a coupon of 7 percent and 12 years at a coupon of 8 percent.

The bond was highly oversubscribed, with the National Treasury noting that the loan would be used to finance development projects, support the budget and refinance 750 million dollars loan from the first Eurobond issue.

The growth of the forex reserves is a positive step towards the stability of the local currency since the apex bank has enough dollars to cushion the shilling in case it faces pressure from international markets.|

Expert urges Kenya to cut tax to stimulate growth

NAIROBI (Xinhua) -- Kenya should consider reducing tax to help stimulate businesses, an expert said on Monday.

Michael Mburugu, head of tax at regional taxation firm PKF, told journalists in Nairobi that many large medium-sized companies are struggling to keep afloat due to sustained adverse economic climate in the last three years.

  Patrick Njoroge, Central Bank of Kenya (CBK) Governor | Coastweek

NAIROBI (Xinhua) -- Patrick Njoroge, Central Bank of Kenya (CBK) Governor displays the recently launched new currency notes during a press conference in Nairobi, capital of Kenya, June 3, 2019. Patrick Njoroge on Monday assured Kenyans that the recently unveiled currency notes were designed in accordance with the law. XINHUA PHOTO - CHARLES ONYANGO
"In order to stimulate growth and put these companies back on track, the government should consider reducing the income tax rate from 30 (percent) to 20 percent for businesses for a period of three years to enable companies re-invest in their businesses and help to create employment," Mburugu said.

He noted that following the recently announced currency demonetization, a local tax amnesty would be a golden opportunity for the government to collect tax and also widen the tax net since many people would be attracted to take this up.

"The on-going foreign income tax amnesty that is expiring on June 30, 2019, has been very successful, an indication that a local amnesty would also be very successful," Mburugu said.

"We recommend such an amnesty be at a preferential rate of principal tax, providing a win-win situation for both the government and the tax payer."

Kenya should also modernize its tax laws because the current income tax law was put in place in 1974, he said.

Mburugu said that the world has truly become a village and significant business deals are happening on a continuous basis between or among people who are in various parts of the world for which value is created and monumental sums of money is made.

"The taxation of such trade is complicated and requires modern tax laws and tools such as the common reporting standards... across various territorial jurisdictions," he added.



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