Growth illustration. [photo/businessdayonline.com]
The International Monetary Fund (IMF) expressed hope on Kenya’s economy saying it will record about 5.5 percent growth in 2018 supported by stable political environment and government’s enhanced efforts to tame current economic policy challenges.
IMF resident representative Jan Mikkelsen said the expected growth is supported by remarkable resilience Kenya’s economy has demonstrated despite recent political uncertainty and general economic slowdown.
“In 2017, our economic forecast for Kenya’s economy is five percent but the same is expected to increase to about 5.5 percent in 2018. This is likely to happen if the political environment remains stable and government deepens changes to tame current economic policy gaps,” said Jan. He made the remarks at Strathmore Business School during a meeting on the economic outlook for Sub-Saharan African and Kenya.
National Treasury Cabinet Secretary Henry Rotich two weeks ago defended government borrowing both from local and international markets saying it is within sustained levels of the GDP.
“We are not ready to increase borrowing so that we can maintain macroeconomic stability. Currently, we are within sustaining levels of 50 percent to the GDP compared to some emerging economies such as Ghana which is at more than 70 percent. We borrow based on the size and capacity of our economy. As a government we are cautious not to plunge the country into a borrowing distress,” said Rotich.
Veronica Okoth, director Economic Pillar at Vision 2030 said the debts are sustainable and have been well committed to financing mega infrastructural projects thus helping in reducing poverty and creating jobs.
The IMF boss underscored the need for the government to pursue new policy options in order to arouse impressive growth rate. “There is need to reduce the fiscal deficit in addition to expanding revenue and contain spending,” he added.
Further, he said there is a need for the government to eliminate interest rates caps while ensuring competition in the banking sector. Rotich had said government is determined to ensure fiscal deficit is maintained at 6.4 percent in the current financial year and further reduced to below six percent in the 2018/19 financial year and four percent by 2019/20 which will further lower debt-to-GDP ratio.