Kenya’s economy will grow by at least 6.2 per cent in 2018/19 financial year if good policies are in place,
CBK has said.
This is 0.7 per cent higher than the World Bank’s forecast of 5.5 per cent but within the Treasury’s estimate of above six per cent.
CBK Governor Patrick Njoroge outlined positive fiscal policy, review of the interest rate cap law, strengthening of banking sector and further progress in ease of doing business as key factors that will catapult the country’s economy to 6.2 per cent from the current average of
4.7 per cent.
“We will have a perfect storm if good policies are put in place.
We should expect improved agricultural yields on back of good rains to continue increasing export inflows and reducing the country’s current account balance to -5.4 in 2018 from -6.2 expected this financial year,’’ said Njoroge.
He explained that imports with regards to food and SGR projects are expected to ease in 2018, but a higher oil import bill is expected due to rising international oil prices.
Oil prices are forecast to rise to $56 a barrel in 2018 from $53 last year as a result of steadily growing demand, agreed production cuts among oil exporters and stabilizing US shale oil production, this according to
World Bank.
Kenya’s oil imports for the current financial year is expected to jump to 3.3 per cent to GDP up[ from 3 three per cent recorded in 2016.
The food import bill is expected to almost double to 2.9 per cent up from 1.5 per cent last year.
The country will however import less chemicals, manufactured food and machinery this financial year,
he said.
He asked the government to substitute borrowing to finance infrastructure projects with public private partnership in order to cut on the growing public debt.
He however insisted that the country’s debt is sustainable, and only that the borrowing gap is narrowing.
Latest data by the Central Bank of Kenya indicate the government’s internal debt at Sh2.22 trillion in November last year, while the external debt stood at Sh2.31 trillion in September 2017.
While retaining the base lending rate at 10 per cent on Monday, CBK ‘s Monitory Policy Committee noted that it will continue to closely monitor the impact of the interest caps on effective transmission of
monetary policy.