Kenya’s import cover has surged to 5.1 months — marking its highest level in nearly six years — following a substantial increase in foreign exchange reserves that have now surpassed Sh1.57 trillion.

This is the first time since June 2019 that Kenya has exceeded this critical threshold, signalling a stronger buffer against external economic shocks, and alleviating concerns regarding the country’s ability to finance essential imports.

The latest data from the Central Bank of Kenya (CBK) indicates a significant change from previous years, during which import cover struggled to remain above the statutory four-month minimum.

The increase comes as persistent pressure on Kenya’s currency and trade balance continues to mount. In early 2023, import cover had dwindled to just over three months, raising fears about the country’s ability to fund essential imports such as fuel.

The rebound is attributed to higher foreign remittances, improved export performance, and a strategic restructuring of the country’s oil import financing arrangements, which have reduced immediate dollar demand.

“Maintaining an import cover above five months is a crucial step in strengthening our external position and ensuring stability in trade and financial markets,” said CBK Governor Kamau Thugge.

The governor further noted that the increase in reserves enhances Kenya’s resilience against fluctuations in global commodity prices and external debt obligations.

Oil import credit deal

A key factor in this development has been the extended oil import credit deal with Gulf suppliers, which has helped ease forex outflows by allowing Kenya to spread petroleum import payments over an extended period.

Kenya extended the fuel import deal with three Guld oil majors as the country raced to meet volumes of fuel that it negotiated to buy under the deal, after the exit of Uganda which imports through Kenya.

The ability to maintain over five months of import financing was a turnaround, offering relief to State policymakers and businesses that faced uncertainty in securing critical foreign-sourced goods.

Kenya’s tourism sector has shown robust growth, with earnings projected to reach Sh650 billion ($5 billion) this year, up from Sh452 billion in 2024. These inflows have significantly contributed to stabilizing foreign reserves and boosting import cover after years of volatility.

With Kenya’s import cover now surpassing the East African Community (EAC) and International Monetary Fund (IMF) minimum benchmarks, attention turns to whether this momentum can be sustained.

However, analysts caution that upcoming external debt repayments and shifting global financial conditions could challenge the stability of Kenya’s forex reserves.