Kenya well placed to tap financial markets, says IMF
03 December 2013, 12:58
Nairobi - Improved fiscal management has left Kenya well placed to borrow from international financial markets, the International Monetary Fund said as it announced an immediate disbursement of $110 million.
Kenya, east Africa's biggest economy, is in the final stages of mandating JP Morgan as lead manager for its delayed first sovereign bond issue worth up to $2 billion.
"The external and fiscal positions are now stronger, high inflation has been tamed, and the economy's resilience to shocks has been boosted," the IMF said in a statement late on Monday.
"Improved policies have placed Kenya in a good position to tap the international financial markets."
The Washington-based body commended Kenya's tighter monetary stance since September and said it had helped anchor inflationary expectations at low levels after inflation spiked on the back of a revision to its Value Added Tax (VAT) law.
The IMF said the Central Bank of Kenya had gained credibility by maintaining inflation within target levels for 12 consecutive months.
Markets lost confidence in the regulator in 2011 when it was slow to tackle surging inflation and a sharp depreciation of the local currency to record lows, market players and economists said at the time.
But the IMF said there were risks to the $37 billion economy. "Kenya's economic outlook is favorable, both external and domestic risks persist," it said, without giving further details.