The International Monetary Fund (IMF) on Friday remained optimistic that Kenya’s economic performance is expected to accelerate in 2020.
According to the Bretton Woods institution, real GDP growth averaged 5.6 percent in the first half of 2019, while inflation has remained within the target band and stood at 5.0 percent in October (year-on-year).
The observations were made after a staff team from IMF, led by Benedict Clements, visited Kenya from November 18-22, 2019, to discuss recent economic developments and the government’s reform plans.
Another mission is planned in early 2020 to hold discussions on a new precautionary stand-by arrangement and undertake the Article IV consultation discussions.
“Kenya’s economy has continued to perform well. Real GDP growth averaged 5.6 percent in the first half of 2019, despite the late onset and below average rainfall that affected agriculture production. Growth is expected to accelerate in the second half of 2019 and 2020. Inflation has remained within the target band and stood at 5.0 percent in October (year-on-year),” said Clements.
He noted that the current account deficit has narrowed, and foreign exchange reserves are adequate, pointing out that credit growth has remained low (6.6 percent year-on-year in October) but is expected to rise steadily because of the recent elimination of interest rate controls and deployment of innovative credit products targeting small enterprises.
“The elimination of the interest rate controls will also provide greater flexibility for monetary policy. After reaching a budget deficit of 7.7 percent of GDP in FY2018/19, the authorities aim to significantly reduce the deficit,” he added in a statement issued in Nairobi.
“Progress in this direction, including the design of tax and expenditure reforms that support a growth-friendly fiscal consolidation, would be important to anchor a new Fund-supported program,” he added.
JK/abj/APA