Press Release: IMF Staff Holds Review Mission to Kenya

December 16, 2015

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

A team from the International Monetary Fund (IMF), led by Vitaliy Kramarenko, visited Nairobi during December 2–16, 2015, to conduct discussions on the second review of the authorities’ economic program supported under a 12-month precautionary Stand-By Arrangement (SBA) and a 12-month Standby Credit Facility (SCF) arrangement for the period of February 2, 2015–February 1, 2016.

The 12-month precautionary SBA/SCF with a total access of SDR 488.52 million (about US$688.3 million) was approved by the IMF’s Executive Board on February 2, 2015 (see Press Release No. 15/29).

At the conclusion of the mission, Mr. Kramarenko issued the following statement:

“The economy is projected to continue to expand robustly, although at a slower-than-projected pace. Real GDP is projected to grow by 5.6 percent in 2015 driven by public infrastructure spending, buoyant credit growth, and strong consumer demand. But the growth acceleration in 2015 is slower than projected under the program, due to delays in planned road infrastructure spending, weaker tourism receipts, and volatile external capital flows. At the same time, inflation rose to 7.3 percent in November, close to the upper end of the authorities’ target range. Real GDP growth is projected to accelerate to about 6 percent in 2016 on account of the continuation of strong investment momentum, effects of good rain on agriculture, and a pick-up in tourism following removal of travel advisories from major tourism source markets.

“Kenya’s growing integration in global financial markets has created significant opportunities, but has also made the country more exposed to global market developments. Although the external current account deficit is projected to decline to 8.5 percent of GDP in 2015 (from 10.4 percent in 2014), it remains high and requires significant foreign capital inflows to be financed. Despite significant volatility of external capital flows in 2015, gross international reserves remain adequate at 4 months of projected 2016 imports.

“Discussions focused on the appropriate policy mix in support of the authorities’ objective of fostering inclusive, investment-driven growth while maintaining macroeconomic stability and debt sustainability. There was broad agreement that the macroeconomic policies will need to be prudent, in order to contain inflation within the target range, maintain public debt on a sustainable path, and further reduce the current account deficit. Moreover, the mission welcomed the authorities’ plans to accelerate structural reforms aimed at strengthening the efficiency and transparency of public spending, supporting the transition to a modern inflation targeting framework, reinforcing banking supervision and regulation, and improving the quality of macroeconomic statistics, including fiscal reporting.

“The staff team will remain in touch with the authorities in the coming weeks with a view to completing the discussions on the second review under the SBA/SCF.

“The team met with Cabinet Secretary for the National Treasury Henry Rotich, Central Bank of Kenya Governor Patrick Njoroge, and other senior government officials, as well as representatives of the business community and leaders of youth organizations.

“The team would like to thank the authorities for the excellent cooperation and warm hospitality.”


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