IMF pledges to support Kenya in its economic growth
11 May 2016, 12:17
Nairobi - (Xinhua) -- The International Monetary Fund (IMF) pledged on Tuesday to support Kenya to grow its economy through policy advice and capacity building.
Visiting IMF First Deputy Managing Director David Lipton told a media briefing in Nairobi that the East African nation has set the basis to make steadfast progress in advancing national development.
"The IMF will support Kenya in this journey through policy advice and capacity building. Should adverse external developments jeopardize the country's development path, Kenya can rely on IMF financial support in the context of insurance-like precautionary facilities available for the country over the next two years," Lipton said.
Lipton who concluded his two-day visit to Kenya said the East African nation has made great strides in recent years in improving access of the population to financial services, including through mobile banking.
"Kenya has become an important destination of capital inflows from advanced and emerging markets. Many structural reforms have advanced, including in the areas of devolution, public financial management, and business regulations," Lipton said.
Lipton added despite strong global headwinds, the real expansion of Kenya's Gross Domestic Product (GDP) has averaged 5.5 percent per year and inflation has remained broadly within target between 2013 and 2015.
His remarks came after the lender in March approved 1.5 billion U.S. dollars standby credit facilities for Kenya.
The deal comprises of 989.8 million dollars two-year Stand-By Arrangement (SBA) and 494.9 million dollars 24-month Standby Credit Facility (SCF) for Kenya, saying Kenya's recent growth performance remains robust and the outlook is positive.
The new precautionary arrangements would provide a policy anchor for continued macroeconomic and institutional reform, and would help mitigate the impact of potential exogenous shocks if they were to materialize.
The Fund said Kenyan authorities have indicated that they will continue to treat both arrangements as precautionary, and do not intend to draw on the new SBA and SCF arrangements unless exogenous shocks lead to an actual balance of payments need.
Lipton noted recent challenges in the banking industry that saw about three banks go into receivership and urged for an urgent strengthening of supervision and regulation of the banking system, as well as to bolster the financial system's safety nets.
In addition, Lipton said, that Kenya has now become an important destination for Foreign Direct Investment and urged Kenya to continue undertaking reforms that are required to ensure it maintains its growth momentum.
"In particular, it will be crucial to undertake a growth-friendly reduction in fiscal deficits over the medium term in order to maintain debt sustainability and a reduction of external current account deficits," he said.
The IMF first deputy MD urged Kenya to prioritize spending of the government including infrastructure, health and education as they will sustain the rapid growth in Kenya.
"We support the government's effort to strengthen revenue mobilization, review its expenditure priorities, and increase the quality of expenditures," Lipton said.