IMF Staff Concludes Visit to Kenya
IMF News, November 22, 2019
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- Published: November 22, 2019
Mission and meetings
- A staff team from the International Monetary Fund (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.
- The team met with:
- Cabinet Secretary for the National Treasury, Mr. Ukur Yatani
- Governor of the CBK, Dr. Patrick Njoroge
- Head of the Public Service, Dr. Joseph Kinyua
- Principal Secretary for the National Treasury, Dr. Julius Muia
- Deputy Governor of the CBK, Ms. Sheila M’Mbijjewe
- Senior government and CBK officials, private sector representatives, and development partners
Growth and inflation
- Real GDP growth averaged 5.6 percent in the first half of 2019.
- Growth is expected to accelerate in the second half of 2019 and 2020.
- Inflation stood at 5.0 percent in October (year-on-year) and has remained within the target band.
External sector and reserves
- The current account deficit has narrowed.
- Foreign exchange reserves are adequate.
Credit, financial reforms, and monetary policy
- Credit growth remained low at 6.6 percent year-on-year in October.
- Credit is expected to rise steadily because of:
- The recent elimination of interest rate controls
- Deployment of innovative credit products targeting small enterprises
- Staff welcomes these reforms, noting they will support higher and more inclusive growth.
- The elimination of the interest rate controls will also provide greater flexibility for monetary policy.
Fiscal situation and policy recommendations
- The budget deficit reached 7.7 percent of GDP in FY2018/19.
- The authorities aim to significantly reduce the deficit.
- IMF staff emphasize that progress toward fiscal consolidation is important, including:
- The design of tax and expenditure reforms that support a growth-friendly fiscal consolidation
- Such progress would be important to anchor a new Fund-supported program
Source: IMF press release, November 22, 2019.