Kenya gets boost from IMF
17 April 2013, 16:40
Nairobi - The International Monetary Fund (IMF) has granted Kenya a US$108,5 million loan facility to fund various state projects.
The IMF says the decision was reached after Kenya stayed on course towards fulfilling economic reforms and posting good results in which inflationary pressures were significantly tamed.
“Economic growth has kept a good pace despite the slowdown of exports to and tourism from Europe.
"International reserves are on the rise and the deficit of the external current account has shrunk significantly—excluding capital-goods imports that have surged because of oil exploration,” IMF said in a statement released earlier today.
According to the IMF, stronger growth is expected in 2013 supported by good weather conditions in East Africa.
With firmer expectations of low inflation, there is scope for further monetary easing, although the Central Bank of Kenya will need to remain vigilant to the risks of possible adverse shocks or a reversal of capital flows.
“Looking forward, the risks from global financial and economic conditions have lessened. In addition, the prospects for commercially-viable oil discoveries could further improve the medium to long term outlook, which will require policies to promote diversified and balanced growth to avoid excessive reliance on natural resources,” it added.
Meanwhile, the World Bank expects the discovery of oil and gas in a peaceful political dispensation to boost growth prospects.
The bank forecasts five per cent growth for Kenya for the next three years (2013-2015), though a worsening of economic conditions in the Eurozone, US or China could limit growth in sub-Saharan Africa by one percentage point this year.
In a statement yesterday, the bank said economic growth in Sub-Saharan Africa is also likely to reach more than five per cent on average in 2013 to 2015.
This is as a result of high commodity prices worldwide and strong consumer spending on the continent, which has ensured that the region remains among the fastest growing in the world, according to the World Bank’s latest Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects.
Consumer spending, which accounts for more than 60 per cent of Africa’s GDP, remained strong last year.
Further, in the same year, about a quarter of African countries grew at seven per cent or higher, and a number of African countries, notably Sierra Leone, Niger, Cote d’Ivoire, Liberia, Ethiopia, Burkina Faso and Rwanda, were among the fastest growing in the world, the bank said.
The new World Bank report forecasts that medium-term growth prospects remain strong and will be supported by a gradually improving world economy.
Makhtar Diop, World Bank Vice-President for Africa, warned that “without more electricity and higher agricultural productivity, Africa’s development future cannot prosper”.
– CAJ News