• Kenya’s economy has continued to perform well, with real GDP growth accelerating to 5.7 percent in the first quarter of 2018, from 4.9 percent in 2017.
  • Growth is being driven by strengthened confidence following the conclusion of the prolonged election period, favorable weather conditions, and a continued recovery in tourism.
  • Discussions focused on macroeconomic policies and structural reforms aiming to ensure the sustainability of investment-driven, inclusive growth.

A team from the International Monetary Fund (IMF), led by Benedict Clements, visited Kenya from July 23 to August 2, 2018 to hold discussions on the second review under a precautionary Stand-By Arrangement (SBA).

At the end of the visit, Mr. Clements released the following statement:

“Kenya’s economy has continued to perform well, with real GDP growth accelerating to 5.7 percent in the first quarter of 2018, from 4.9 percent in 2017. The acceleration of growth is being driven primarily by strengthened confidence following the conclusion of the prolonged election period, favorable weather conditions, and a continued recovery in tourism. Inflation has remained within the authorities’ target range (5+/-2.5 percent) since July 2017 as better weather conditions have brought down food inflation. Headline CPI growth was 4.3 percent y/y as of June 2018, while core inflation remained low at 3.6 percent y/y.

“Fiscal targets for FY2017/18 under the program were met. The budget deficit for the fiscal year ending in June 2018 was KSh614.6 billion (equivalent to 7.0 percent of GDP), within the target under the program. This represents a significant tightening from the previous year’s deficit of 9.0 percent of GDP. However, revenues significantly underperformed, coming in 2.2 percent of GDP lower than program targets. To meet the deficit target in this context, the authorities rationalized expenditures.

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