Kenya cuts 2017 growth forecast due to drought, po­lit­i­cal un­rest

Kuwait Times - - BUSINESS -

Kenya low­ered its 2017 eco­nomic growth forecast to 5.5 per­cent due to drought and po­lit­i­cal un­cer­tainty, a top of­fi­cial said on Friday, as the govern­ment cut non-es­sen­tial spend­ing to free up funds for a re­peat pres­i­den­tial elec­tion. The drought ear­lier this year hurt agri­cul­ture, which ac­counts for 30 per­cent of out­put, said Ka­mau Thugge, the prin­ci­pal sec­re­tary in the min­istry fi­nance.

He said some in­vestors are also de­lay­ing de­ci­sions af­ter the Supreme Court nul­li­fied the re­sults of an Aug. 8 pres­i­den­tial elec­tion cit­ing ir­reg­u­lar­i­ties in the tal­ly­ing process.

A re­peat poll pit­ting Pres­i­dent Uhuru Keny­atta against op­po­si­tion leader Raila Odinga is sched­uled for Oct. 17. Odinga says he will not par­tic­i­pate un­less de­mands are met, in­clud­ing the res­ig­na­tion of some staff from the elec­toral board. Kenya has the high­est per capita in­come in the re­gion and is known for its cap­i­tal­ist tra­di­tion, sta­bil­ity and role as a Western ally. It hosts the re­gional head­quar­ters of sev­eral global firms.

The govern­ment had ini­tially pro­jected a 5.9 per­cent growth for this year but the econ­omy ex­panded 4.7 per­cent in the first quar­ter, mainly due to poor agri­cul­tural per­for­mance.

Thugge said growth would rise to 6.5 per­cent per year in the medium term. “This is con­tin­gent on hav­ing good weather,” he told a meet­ing con­vened to dis­cuss bud­get prepa­ra­tions. The govern­ment’s rev­enue col­lec­tion for the fis­cal year start­ing July was be­hind tar­get by 29 bil­lion shillings ($282 mil­lion), he said. The rev­enue tar­get is 1,549.4 bil­lion shillings for the fis­cal year.

“There is a short­fall in cus­toms. There may be peo­ple wait­ing be­fore they im­port things,” he told Reuters on the side­lines of the meet­ing. Adding to the squeeze, the elec­toral board has re­quested 12 bil­lion shillings for the pres­i­den­tial re-run. “That is only the di­rect cost. There is the need to pro­vide for se­cu­rity and so those costs could be much higher than the 12 bil­lion. This was not bud­geted for,”Thugge said, adding they will cut non-es­sen­tial ex­pen­di­ture to fund the poll. Govern­ment of­fi­cials will no longer be al­lowed to travel out­side the coun­try with­out clear­ance from the pres­i­dent and do­mes­tic travel will also be re­viewed, he said. —Reuters

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