NAIROBI, Kenya, Sep 17 – Kenya’s economic reforms have delivered huge pay-offs, making the country an example of the continent’s market-driven economic dynamism.
IMF Africa Director Antoinette Sayeh said this has not happened by chance but reflects Kenya’s efforts to anchor economic stability through sound fiscal, monetary policies and market-oriented structural reforms.
“In fact, Kenya has stayed the course of economic reforms, with good results. Inflation has been tamed. Economic growth has maintained a good pace, despite the less than favourable global economic environment,” Sayeh said.
She was speaking during a high level conference on Kenya’s successes, prospects and challenges that was opened by President Uhuru Kenyatta in Nairobi on Tuesday.
The IMF Africa Director noted that international reserves are on the rise and Kenya’s public debt profile has improved. She added that in Kenya, financial inclusion is advancing rapidly, giving millions of people a stake in the economy.
“Foreign investment flows have risen and boosted the stock market,” Sayeh said, pointing out that Kenya’s key achievements in structural reforms cannot be understated.
She observed that the World Bank’s Country Policy and Institutional Assessment (CPIA) for Kenya has now risen to the top in Sub-Saharan Africa. In particular, the IMF Africa Director said, better public financial management has increased accountability and reduced the scope for corruption.
She emphasized that improved management of public resources has created the basis for an orderly fiscal decentralization process in Kenya.
“Kenya is now less vulnerable to the vagaries of the global economy and to domestic generated shocks than it was three years ago, when it embarked on its economic reform program with financial support from the IMF,” Sayeh said, adding that the foundation for faster and lasting growth has been laid.
She urged Kenya to build on the foundation of success by raising the efficiency and quality of public spending.
“This will create fiscal space, which is obviously important for infrastructure, where large gaps remain, but also for social spending, where it is particularly important to ensure that scarce public resources are used well,” she said.
Sayeh indicated that the ongoing fiscal decentralization in Kenya provides an opportunity to improve accountability and the quality of service delivery, but will need to be well-managed to guard against the risk of excessive spending because of overlapping functions.
She underscored the need for capacity building in public financial management at the county level, saying IMF fully supports Kenya’s reform program.
“More recently, we have started providing support on global best practices in the management of natural resource revenues. We look forward to continuing our partnership with Kenya,” the IMF Africa Director said.
She said Kenya is one of the countries where Africa’s recent progress is evident and the opportunities for economic transformation and growth are manifest.
National Treasury Cabinet Secretary Henry Rotich said IMF’s Extended Credit Facility (ECF) has supported Kenya’s economic reforms leading to a steady growth.
“This year we expect real GDP growth of around 5.6pc rising to 7pc in the medium term and double digits by the end of the second Medium Term Plan in 2018,” Rotich said.
He emphasized that Kenya’s economic reforms are home-grown and not imposed by development partners.
(Story by Kazungu Chai)