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Foreign Exchange Reserve Adequacy in East African Community Countries

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  • International Monetary Fund

Abstract

The concomitant external shocks experienced in 2008-09 by the East African Community (EAC) countries of Kenya, Rwanda, Tanzania, and Uganda and stepped-up support by the IMF—including the SDR allocation—and other donors, are likely to arouse renewed interest in the question of the adequate level of international reserves. This paper discusses the evolution of reserve holdings in EAC countries and uses several tools for assessing reserve adequacy in the region. The analysis suggests that reserve levels in most cases seem to include safety buffers, and thus, do not require immediate action. However, the situation could become tighter if export recovery is delayed or export prices do not pick up. Over the medium term, the desirable reserve path should also be adapted to regional and international integration.

Suggested Citation

  • International Monetary Fund, 2009. "Foreign Exchange Reserve Adequacy in East African Community Countries," IMF Departmental Papers / Policy Papers 2009/008, International Monetary Fund.
    • Handle: RePEc:imf:imfdps:2009/008
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    Cited by:

    1. Prakash Kumar Shrestha, Ph.D., 2016. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," NRB Working Paper 32/2016, Nepal Rastra Bank, Research Department.
    2. Prakash Shrestha, 2017. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," Working Papers id:12166, eSocialSciences.

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