- The authorities requested a six-month extension of the SBA that expires on March 13, 2018 to allow more time to complete the outstanding reviews of the IMF-supported program.
- In support of this request, the authorities have committed to policies to achieve the program objectives, including reducing the fiscal deficit and substantially modifying interest controls.
- Annual growth could rise further to 6½ percent within a couple of years, provided that the authorities continue economic reforms, including reducing the fiscal deficit and amending interest rate controls.
A staff team from the International Monetary Fund (IMF), led by Benedict Clements, visited Kenya from February 19 to March 2, 2018, to conduct the 2018 Article IV consultation and hold discussions on continued IMF support to Kenya, including the authorities’ request for an extension of the current SBA.
At the end of the visit, Mr. Clements released the following statement:
“ Kenya’s economy continued to perform well in 2017 despite a severe drought and a prolonged election period ; however, real GDP growth is estimated to have slowed to 4.8 percent for the year as a whole. Growth was mainly supported by public investment spending and solid non-agriculture sector performance. Inflation has declined to below the mid-point of the authorities’ target range, reflecting a substantial decline in food inflation and appropriate monetary policies. Annual headline inflation declined to 4.5 percent in February from 6.3 percent in 2016. The banking system has remained stable, and the Central Bank of Kenya (CBK) has continued to strengthen the financial system through its reform program.
“The external current account deficit rose to an estimated 6.4 percent of GDP in 2017 from 5.2 percent in 2016, reflecting higher imports, including fuel. The exchange rate has remained stable and foreign exchange reserves have risen to US$7.1 billion as of end-January 2018 and are sufficient to withstand any potential near-term external shocks.
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