Foreign currency deposits in local banks have risen past the half a trillion mark for the first time, mainly driven by Kenyans sending money home to take advantage of the tax amnesty programme.
The Kenya National Bureau of Statistics (KNBS) and the Central Bank of Kenya (CBK) say in their latest reports that the foreign currency holdings stood at Sh514 billion at the end of May, having risen 17 per cent or Sh73 billion in 12 months.
“From our discussions with the banking sector players, we attribute the increase in foreign exchange deposits to the tax amnesty programme, with a number of tier three banks recording notable inflows,” said Genghis Capital macroeconomic analyst Churchill Ogutu.
“With the tax amnesty extended till June next year, we expect the foreign exchange deposits to continue the positive momentum.”
Treasury secretary Henry Rotich in 2016 offered a tax pardon to encourage fat cats holding undeclared assets overseas to bring them home by June this year, leading to a last-minute rush in May.
Mr Rotich, however, extended the deadline to June 2019, and relaxed the scrutiny on how the assets were accumulated to encourage compliance.
Source: Business Daily