{
  "title": "Kenya: Staff Report for the 2014 Article IV Consultation",
  "publication": "IMF Staff Country Reports, October 2, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2016/12/31/kenya-staff-report-for-the-2014-article-iv-consultation-42379",
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  "summary": "KEY ISSUES Context: Kenya has embarked on major reforms in line with the 2010 constitution. The new government has started the process of devolution at a fast pace, introducing a reporting framework that allows for monitoring progress and challenges.",
  "sections": [
    {
      "heading": "Context and recent developments",
      "content": "- Kenya has embarked on major reforms in line with the 2010 constitution, and the new government has initiated devolution at a fast pace with a reporting framework to monitor progress and challenges.\n- Macroeconomic stability in a market-friendly environment continues to attract foreign investors.\n- Kenya placed its first US$2 billion Eurobond at favorable terms; proceeds are to be used to upgrade power generation and transportation.\n- Promising commercial prospects of oil discoveries could provide significant foreign exchange and fiscal resources.\n- Regional integration: Kenya is participating actively in East Africa integration and has shown progress in reducing delays from the port of Mombasa to Kampala and Kigali.\n- Financial sector developments:\n  - Kenyan banks are expanding their business models through East Africa and other regional countries while complying with upgraded prudential regulations.\n  - The Central Bank of Kenya (CBK) maintains proactive financial inclusion policies that have facilitated access to credit by small and medium enterprises.\n- Governance and security:\n  - Legal reforms led to the Financial Action Task Force removing Kenya from its watch list.\n  - Recent terrorist attacks and threats have raised security concerns, especially in coastal areas bordering Somalia."
    },
    {
      "heading": "Outlook and macroeconomic policies",
      "content": "- Growth and fiscal stance:\n  - Growth is projected to accelerate to 5.8 percent in 2014/15, driven by higher public and private investment and measures to improve the business environment.\n  - The 2014/15 budget aims at rebalancing recurrent and development spending.\n  - Medium-term fiscal policies intend to bring down the debt burden consistent with the East African Community Monetary Union (EAMU) Protocol convergence criteria.\n- Monetary and price developments:\n  - Inflation remains broadly in check, but rising food prices and rapid credit growth require careful monitoring by the CBK."
    },
    {
      "heading": "Key issues and staff discussions",
      "content": "- Devolution and public financial management:\n  - Discussions centered on devolution implementation, particularly enforcement of accountability provisions.\n  - Some checks and balances are effective — for example, Treasury approval is required for guarantees for county borrowing — but a more systematic framework is needed.\n  - Staff and authorities agreed that the scale of transfers to counties magnified government cash management problems.\n  - The recently introduced Treasury Single Account (TSA) is expected to help address cash management problems and contribute to more effective monetary operations.\n- Natural resource governance:\n  - Discussions focused on designing the legal framework for natural resource management to ensure consistency with public finance management provisions."
    },
    {
      "heading": "Subject areas and keywords covered",
      "content": "- Subject areas: Balance of payments statistics; Banking; Budget planning and preparation; Economic and financial statistics; External debt; Government finance statistics; Public debt; Public financial management (PFM).\n- Keywords: Africa; authority; Balance of payments statistics; Budget planning and preparation; CR; debt; deficit; devolved government system; East Africa; Global; Government finance statistics; government management; IMF staff; inflation expectation; investment needs; ISCR; Kenya; Sub-Saharan Africa.\n\nInternational Monetary Fund. Kenya: Staff Report for the 2014 Article IV Consultation (October 2, 2014).\n\n---\n\n Content in this bundle\n\n- cr14302\n  - cr14302 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - cr14302 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: October 2, 2014",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498399876.002",
    "Kenya has embarked on major reforms in line with the 2010 constitution, and the new government has initiated devolution at a fast pace with a reporting framework to monitor progress and challenges.",
    "Macroeconomic stability in a market-friendly environment continues to attract foreign investors.",
    "Kenya placed its first US$2 billion Eurobond at favorable terms; proceeds are to be used to upgrade power generation and transportation.",
    "Promising commercial prospects of oil discoveries could provide significant foreign exchange and fiscal resources.",
    "Regional integration: Kenya is participating actively in East Africa integration and has shown progress in reducing delays from the port of Mombasa to Kampala and Kigali.",
    "Financial sector developments:",
    "Governance and security:",
    "Growth and fiscal stance:",
    "Monetary and price developments:",
    "Devolution and public financial management:",
    "Natural resource governance:",
    "Subject areas: Balance of payments statistics; Banking; Budget planning and preparation; Economic and financial statistics; External debt; Government finance statistics; Public debt; Public financial management (PFM).",
    "Keywords: Africa; authority; Balance of payments statistics; Budget planning and preparation; CR; debt; deficit; devolved government system; East Africa; Global; Government finance statistics; government management; IMF staff; inflation expectation; investment needs; ISCR; Kenya; Sub-Saharan Africa.",
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