Statement at the Conclusion of an IMF Mission to KenyaPress Release No.11/194
May 24, 2011
An International Monetary Fund (IMF) mission team led by Mr. Domenico Fanizza visited Nairobi during May 11-24, 2011, to conduct the first review under the Extended Credit Facility Arrangement. The mission met with the Prime Minister, the Deputy Prime Minister and Minister for Finance, the Central Bank Governor, and other senior government officials. The mission also had productive discussions with parliamentarians, representatives of civil society, and donors.
At the conclusion of the visit, Mr. Domenico Fanizza issued the following statement:
“Kenya’s economic reform program is off to a good start. Economic activity rebounded in 2010, driven by strong agricultural production and a dynamic private sector. The growth was broad-based and the sharing of its benefits was supported by policies to promote financial inclusion. Prospects for 2011 remain strong, with signs of continued investments in all sectors of the economy, although recent inflationary pressures and insufficient rains present downside risks that will need to be addressed in the coming months.
“Performance under the program has been satisfactory. The fiscal outcome for 2010/11 (July-June) is likely to be better than projected and the direction of monetary policy remained appropriate. The authorities also made good progress with their structural reform efforts and reaffirmed their commitments to the program, including on the adoption of a new public financial management law covering all levels of government that will strengthen expenditure control and increase accountability.
“Moving forward, the key priorities will be to curb inflation and to strengthen the external position in response to the widening of the current account deficit. The focus of monetary policy should thus be on controlling demand pressures in order to preserve macroeconomic stability. The 2011/12 budget reflects the authorities’ commitment to gradual fiscal consolidation over the medium-term, while addressing the country’s development needs and providing sufficient scope for the implementation of the Constitution. The envisaged strengthening of the fiscal position will also allow for the preservation of sustainable debt dynamics. Welcome efforts to broaden financial inclusion and deepen the financial markets will need to be supported by strengthened banking supervision and enhanced regulatory frameworks.
“The mission encouraged the authorities to continue satisfactory program implementation in order to achieve sustainable and inclusive growth, in line with the objectives of Vision 2030. The IMF Executive Board is expected to consider the review by end- June 2011.
“The mission takes this opportunity to thank the authorities for their warm hospitality and high quality of discussions.”