Press Release: First Deputy Managing Director Anne Krueger's Statement at the Conclusion of a Visit to Kenya

December 4, 2003

"I was delighted to have the opportunity to visit Nairobi so soon after the IMF's Executive Board approved Kenya's request for a three-year arrangement under the Poverty Reduction and Growth Facility.

"During my visit here, I have had useful discussions with President Kibaki, Finance Minister Mwiraria and his colleagues, and also with the leader of the opposition, the Hon. Uhuru Kenyatta. These talks helped me gain a greater understanding of the challenges facing Kenya and the government's ambitions for economic progress.

"Let me say first that the government is to be congratulated on the steps it has already taken to root out corruption—especially in the judiciary—and improve governance. The measures introduced have confounded some of the skeptics, I know.

"I am also pleased by the government's commitment to reform in the public service, to the control of public expenditure and to the need to reduce the government's role in many areas of economic activity. These are all vital steps in establishing a sound macroeconomic framework which could help deliver faster economic growth and rising living standards.

"Getting ambitious economic reforms under way involves determination and not a little political courage. The IMF's Executive Board was encouraged by the comprehensive agenda that the government has laid out. I assured the government that the Fund is keen to support the reform process. An IMF team is currently visiting Kenya to review developments and hold talks with senior officials on implementation of the reform agenda.

"Implementation is now crucially important. The government knows that the reform program on which it has embarked must be adhered to if the results that the citizens of Kenya want to see are to be delivered.

"Fighting corruption is a continuous process. Measures to improve governance at all levels take time to work through—attitudes do not change overnight.

"The same is true of public expenditure control. Finance ministers are always faced with competing demands, and I have seen at first hand the sort of demands for resources that Minister Mwiraria faces. But fiscal discipline is crucial if the Kenya's domestic debt burden is to be reduced—as it urgently needs to be. And within tight control of the overall budget, the Minister and his team also recognize that they have to restructure expenditures to target the areas of greatest need more effectively. There is also a recognition of the need to strengthen Kenya's financial sector so that it can play a more effective role in the allocation of resources.

"I also urged the government to consider faster progress towards trade liberalization which the Fund believes is an important factor in accelerating growth.

"I was reassured by President Kibaki's support for these reforms. I was also encouraged by his commitment to privatization. President Kibaki emphasized to me his belief that a more vigorous private sector is needed to spur Kenya's economic growth.

"I am pleased that the Paris Club creditors have provided financing assurances for another debt rescheduling for Kenya, which will free up significant resources for poverty-reducing expenditures," Ms. Krueger stated.


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