Hilbroy Advisory: economy likely to grow by five percent, says IMF

Hilbroy Advisory Reports: Kenya’s economy is likely to grow by 5.4 per cent, says the International Monetary Fund. The IMF on Tuesday said inflationary pressures and insufficient rains, however, present risks that need to be addressed.

“Kenya’s economic reform programme is off to a good start. Economic activity rebounded in 2010, driven by strong agricultural production and a dynamic private sector,” said IMF’s Domenico Fanizza during a press briefing on their mission to Kenya to conduct a review under the extended credit facility.

Mr. Fanizza said the growth was broad-based and the sharing of its benefits was supported by policies to promote financial inclusion.

“Prospects for 2011 remain strong, with signs for continued investments in all sectors of the economy,” he said.

The government has set an economic growth target of 4.2 per cent, down from 5.6 per cent last year, due to poor rains, high commodity prices, a weak shilling and the elections in 2012.The IMF mission recommended that the government, through the Central Bank of Kenya, give priority to curbing inflation and strengthening the external position in response to the widening current account deficit.

“The focus of the monetary policy should thus be on controlling demand pressures in order to preserve macroeconomic stability,” the mission said.

It said the 2011/12 budget reflects the authorities’ commitment to gradual fiscal consolidation over the medium term, while addressing the country’s development needs and providing sufficient scope for the implementation of the new Constitution.

The mission called for efforts to broaden financial inclusion and deepen the financial markets that will need to be supported by strengthened banking supervision and enhanced regulatory frameworks.

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