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Kenya: IMF Forecasts 4 Percent Economic Growth
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Business Daily (Nairobi)
3 July 2008
Posted to the web 3 July 2008
Albert Muriuki
The International Monetary Fund has lauded the Vision 2030 goal while predicting that Kenya's GDP will grow by four per cent in 2008, echoing predictions by the government.
However, the body cautioned that achieving the objectives of making Kenya a middle-income country will require further structural reforms and public spending to address crucial supply bottlenecks.
Rising world prices for food, fuel, and fertilizer will however pose new challenges for policy makers in Kenya.
The IMF staff mission, headed by Mr Thomas Krueger, visited Kenya from June 23 to July 2. It praised the formation of the grand coalition government and said that this was the main reason for the recovery being experienced in the economy.
While calling for urgent remedies to guard against rising food prices, the mission discussed with the government the possibility of designing measures targeted at the poor, especially improvement of access to credit.
The IMF supported the Central Bank of Kenya's (CBK's) recent actions to tighten monetary policy.
The donor also discussed the modalities of keeping the 2008/09 deficit below the level in the last financial year, thereby stabilizing public debt in relation to GDP. According to the IMF, with a solid domestic revenue base, this should be possible.
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Analysts say that for Kenya to achieve strong growth it will require the addressing of supply bottlenecks and structural reforms.
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