Kenya: Statement by the IMF Staff Mission to Kenya

May 30, 2007 -- The following statement was issued in Nairobi on May 29 by Scott Rogers, Resident Representative of the International Monetary Fund (IMF) in Kenya:

"An IMF mission visited Nairobi during May 16-25 to hold discussions on recent economic developments and fiscal and monetary policies for the coming fiscal year. The mission met with Amos Kimunya, Minister of Finance, and Njuguna N'dungu, Governor of the Central Bank, as well as other senior officials from the Ministry of Finance, Central Bank of Kenya, and other government ministries and agencies. The mission also met with representatives of civil society, and the business and donor community. The visit occurred against the backdrop of the recently concluded second review of the government's economic program being supported by the IMF's Poverty Reduction and Growth Facility (PRGF).

"The Kenyan economy has continued to perform strongly. The rate of real GDP growth is projected to rise for the fourth consecutive year in 2006/07. Inflation has slowed markedly in recent months, largely as a result of the unwinding of earlier drought-related food price increases. This performance has been supported by a prudent fiscal policy.

"We broadly share the authorities' outlook for the economy in 2007/08, with real GDP growth projected at over 6 percent. Progress was made in discussions on a budget designed to maintain strong revenue performance and further reorient spending toward priorities in health, education, and infrastructure—to help lay the foundation for the government's Vision 2030—while limiting domestic borrowing to contain pressure on interest rates. We look forward to further dialogue with the authorities as they finalize their work on the budget framework. The mission supported the Central Bank of Kenya's policy objective of keeping overall inflation low through the more effective use of monetary instruments.

"The mission agrees with the government's emphasis on proposed structural reforms in the areas of public expenditure management, the financial sector, public enterprise reform and governance. The Governance Action Plan for a Prosperous Kenya lays out an ambitious agenda; rapid progress in implementing this action plan will now be crucial to ensure the efficient use of public resources and improve the prospects for strong medium-term economic growth."

Source: IMF