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Facing financial woes, President Ruto has brought back a front-rank orthodox economist to run the central bank
Former Treasury technocrat Kamau Thugge's rehabilitation looks complete after President William Ruto nominated him to replace the retiring Patrick Njoroge as governor of Kenya's central bank.
Thugge returned to government last year as Ruto's fiscal affairs and budget policy advisor. That was three years after he was dismissed, along with finance minister Henry Rotich, from his post as principal treasury secretary in Uhuru Kenyatta's administration. The two were charged with corruption related to the CMC Di Ravenna dams project (AC Vol 63 No 22, A different kind of cronyism & Vol 60 No 15, A killing joke ). The charges against Thugge were dropped in early 2021.
A respected economist who served as a senior Treasury official in both the Kenyatta and Mwai Kibaki governments, Thugge was well regarded by western officials. He worked for the IMF in the 1980s and 1990s, rising to deputy division chief. That could prove useful as the Ruto government will be working closely with the IMF support in the coming months as it struggles to manage its debt repayment obligations.
Thugge's approval by the National Assembly is likely to be straightforward, given the level of support for Ruto there.
His immediate priority will be to arrest a sharp decline in the Kenyan shilling's value, which has lost over 20% against the US dollar this year. That, in turn, has put more pressure on the central bank's foreign exchange reserves.
Working with Finance Minister Njuguna Ndung'u, Thugge will have to manage the government's planned shift to borrowing more from local money market (as much as 70% according to some estimates) to finance the budget deficit. That will prove a stern test for the credibility of the government's strategy.
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