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Kenya: Central Bank Governor must step aside – Lawmakers
Central Bank of Kenya governor Njuguna Ndung’u. PHOTO/File
(Reuters) – A Kenyan parliamentary committee has asked central bank governor Njuguna Ndung’u to step aside from his post, it said on Tuesday, proposing an investigation into how he handled the local currency’s plunge to a historic low late last year.
The shilling hit a record low of 107 per dollar on October 11, but has since strengthened more than 20 percent after the central bank raised its key lending rate to 18 percent in December from 7 percent in September.
The committee said in its report that the governor failed to react in a timely fashion to address the shilling’s decline, causing panic in the market and leading to speculation and hoarding of foreign exchange in east Africa’s biggest economy.
The report was presented to parliament on Tuesday and could be debated and voted on by the assembly within weeks.
If the suggestion is approved, President Mwai Kibaki would then have to consider whether to set up a tribunal and if one was formed Ndung’u might have to step aside to allow the investigation to take place.
“The Committee recommends: The Governor takes responsibility for allowing the sharp decline of the shilling. The Governor steps aside to pave the way for thorough investigations,” the report said.
“The Committee recommends: That the President should constitute a Tribunal to investigate the Governor’s conduct, incapability and incompetence to perform the functions of the office.”
The report criticized the central bank for keeping its discount window rate, charged to banks borrowing from the regulator as a last resort, below the interbank and Treasury bill rates, encouraging commercial banks to borrow from the window as the shilling tumbled.
