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.
At the end of the visit, Mr. Clements made the following statement:
“Kenya’s economy has continued to perform well. Real GDP growth averaged 5.6 percent in the first half of 2019, despite the late onset and below average rainfall that affected agriculture production. Growth is expected to accelerate in the second half of 2019 and 2020. Inflation has remained within the target band and stood at 5.0 percent in October (year-on-year).
“The current account deficit has narrowed, and foreign exchange reserves are adequate. Credit growth has remained low (6.6 percent year-on-year in October) but is expected to rise steadily because of the recent elimination of interest rate controls and deployment of innovative credit products targeting small enterprises. Staff welcomes these reforms, which will support higher and more inclusive growth. The elimination of the interest rate controls will also provide greater flexibility for monetary policy. After reaching a budget deficit of 7.7 percent of GDP in FY2018/19, the authorities aim to significantly reduce the deficit. Progress in this direction, including the design of tax and expenditure reforms that support a growth-friendly fiscal consolidation, would be important to anchor a new Fund-supported program.”
The team met with the Cabinet Secretary for the National Treasury, Mr. Ukur Yatani; the Governor of the CBK, Dr. Patrick Njoroge; the Head of the Public Service, Dr. Joseph Kinyua; the Principal Secretary for the National Treasury, Dr. Julius Muia; the Deputy Governor of the CBK, Ms. Sheila M’Mbijjewe; and senior government and CBK officials. Staff also had productive discussions with representatives of the private sector and development partners.