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IMF lauds Kenya economic policies

03 October 2013, 18:05

Nairobi - The International Monetary Fund (IMF), which is upbeat at the growth of the local economy in the coming years, pledged its commitment to continue supporting Kenya and its economic reform efforts.

The sentiments follow a mission led by Domenico Fanizza, which visited Nairobi from September 19 until Wednesday to conduct the sixth and last review under the three-year Extended Credit Facility (ECF) arrangement approved in January 2011.

The mission met with Henry Rotich, Cabinet Secretary of the National Treasury, Professor Njuguna Ndung’u, Governor of the Central Bank of Kenya (CBK), other senior government officials, and representatives of the private sector, civil society and development partners Fanizza lauded Kenya’s economic reforms over the last three years saying they had paid off.

“The economy has proved resilient in the face of exogenous shocks such as the 2011 drought, and stagnating demand in traditional export and tourism markets as a result of the global financial crisis. Budgetary discipline has helped ensure fiscal and external sustainability, while still providing sufficient resources to implement the new Constitution and start fiscal devolution,” he said.

Fanizza said during the period, monetary policy had succeeded in bringing inflation down and cementing expectations of low and stable prices.
Economic growth had remained robust and is on an upward trend, supported by strong domestic demand.

He added that structural reforms had made progress to prepare for the devolution process, notably through a strengthened regulatory environment for public financial management at both national and county level.

The recently enacted new Value Added Tax law should increase administrative efficiency, bolster revenue collection, and create resources for priority social and development outlays. International reserves have risen to more than $6 billion, and the external current account balance excluding capital imports - which have surged because of oil exploration - has improved.

“Growing financial inclusion offers the hope of job-creating opportunities for millions of previously excluded Kenyans and, combined with the recent decline in interest rates, should provide support to economic activity in the period ahead. Investor interest in the Kenyan economy has gained momentum, translating into strong performance on the stock market and the establishment of regional operations by foreign corporations and financial institutions,” said Fanizza.

The sixth and final program review under the ECF arrangement is tentatively scheduled for consideration by the IMF Executive Board in November 2013. Upon approval, the last tranche of the loan for an amount of about US$110 million would become available, bringing total disbursements under the arrangement to about US$750 million.

– CAJ News


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