IMF says Kenya's growth re­mains ro­bust

The Pak Banker - - FRONT PAGE -

WASH­ING­TON: The Ex­ec­u­tive Board of the In­ter­na­tional Mon­e­tary Fund (IMF) to­day ap­proved a new SDR 709.259 mil­lion (about US$989.8 mil­lion) 24-month Stand-By Ar­range­ment (SBA) and a SDR 354.629 mil­lion (about US$494.9 mil­lion) 24-month Standby Credit Fa­cil­ity (SCF) for Kenya, for a com­bined SDR 1.06 bil­lion (about US$1.5 bil­lion, or 196 per­cent of Kenya's quota).

The Ex­ec­u­tive Board also com­pleted the se­cond and fi­nal re­views un­der the pre­vi­ous SBA and SCF for Kenya. The SBA and SCF, ini­tially for 12 months, with a com­bined to­tal ac­cess of SDR 488.52 mil­lion (about US$688 mil­lion), were ap­proved by the IMF's Ex­ec­u­tive Board on Fe­bru­ary 2, 2015 and ex­tended un­til March 15, 2016 on Jan­uary 27, 2016.

The Kenyan au­thor­i­ties have in­di­cated that they will con­tinue to treat both ar­range­ments as pre­cau­tion­ary, and do not in­tend to draw on the new SBA and SCF ar­range­ments un­less ex­oge­nous shocks lead to an ac­tual bal­ance of pay­ments need. To­day's de­ci­sion would make avail­able SDR 542.8 mil­lion (about US$757.5 mil­lion), and the re­main­der in four tranches upon com­ple­tion of semi-an­nual pro­gram re­views. Fol­low­ing the Ex­ec­u­tive Board dis­cus­sion on Kenya, Mr. Min Zhu, Deputy Man­ag­ing Di­rec­tor and Act­ing Chair, said, "Kenya's re­cent growth per­for­mance re­mains ro­bust and the out­look is pos­i­tive.

De­spite pos­i­tive pol­icy steps un­der­taken un­der the cur­rent Fund-sup­ported pro­gram, the econ­omy re­mains vul­ner­a­ble to shocks, re­flect­ing less fa­vor­able global fi­nan­cial mar­ket con­di­tions, as well as con­tin­ued se­cu­rity threats and po­ten­tial ex­treme weather events. In this con­text, the new pre­cau­tion­ary ar­range­ments would pro­vide a pol­icy an­chor for con­tin­ued macroe­co­nomic and in­sti­tu­tional re­form, and would help mit­i­gate the im­pact of po­ten­tial ex­oge­nous shocks if they were to ma­te­ri­al­ize."

"The en­vis­aged re­duc­tion of the fis­cal deficit by 3 per­cent of GDP over the next two years through a well-bal­anced pol­icy mix would main­tain space for high-pri­or­ity in­fra­struc­ture in­vest­ments and greater pro­vi­sion of health and education ser­vices in a sus­tain­able man­ner. Con­tin­ued pub­lic fi­nan­cial man­age­ment re­forms-aimed at up­grad­ing ef­fi­ciency, trans­parency and ac­count­abil­ity, to com­ple­ment the en­vis­aged fis­cal con­sol­i­da­tion-are key to con­tain­ing risks.

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