Voice of America (Washington, DC)

Kenya: IMF Director Lagarde Warns of Looming Shocks in Kenya

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"What I am saying is that the IMF has been Kenya's partner - through thick and thin."

While in Kenya, Lagarde met with Kenyan President Uhuru Kenyatta, treasury officials, women leaders and representatives from the business community.

Kenyan officials are seeking an emergency loan from the Washington-based lenders to use it as a fall back to looming economic shocks. They say the loan, which the IMF is to disburse as a lender of last resort, will be priced on commercial terms - signalling its possible impact on Kenya's external debt burden.

But the IMF boss advised Kenyan officials to promote fiscal discipline and encourage foreign investment in order to maintain the country's high economic growth rate, and contribute to sub-Saharan development.

"But let me be clear on this point: Kenya's achievements are Kenya's. Your country has had full ownership of the reform agenda. You have implemented it. You have garnered domestic support for it. And that is why it was a success.

"Now is a good time to commend Kenya on its performance. But this is not the time for complacency.

"Yes, Kenya's future holds great promise. Looking ahead, achievements need to be deepened and broadened, so the economy can be made even more resilient, and the benefits of growth can be even more widely shared among all the Kenyan people."

The decision by Kenya's treasury officials to turn to the precautionary lending arrangement is one of the measures the Kenyatta government is taking to prevent a recurrence of the shocks that hit the economy in 2011 after the Central Bank of Kenya failed to adequately respond to the combination of internal and external shocks.

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