Economy has stabilised despite global shocks, says Treasury PS

The government has made significant progress in restoring Kenya's macroeconomic stability after years of global economic shocks, National Treasury PS Chris Kiptoo has said.

Speaking at a burial in Gichugu, Kirinyaga county, he said the economy had faced severe external pressures beginning in 2022 following the effects of the Covid-19 pandemic and the Russia-Ukraine war, which pushed inflation to 9.6 per cent, weakened the Kenya shilling and complicated public debt management.

"We have worked very hard to stabilise the economy. Inflation came down to as low as 2.7 per cent before settling at around 4.4 per cent, and we have stabilised the shilling," Kiptoo said.

The PS said the government's interventions over the past three years had strengthened the country's economic fundamentals, restoring confidence in the financial sector, while shielding Kenya from the worst effects of global uncertainty.

Foreign exchange reserves had improved significantly, with import cover rising from below three months to about seven months, he said.

Kiptoo said the stronger reserves had enhanced the country's ability to absorb external shocks, maintain exchange rate stability and support critical imports, including fuel and other essential commodities.

He added that improved macroeconomic stability had translated into better performance at the Nairobi Securities Exchange, where investors who bought shares in recent years had realised substantial gains as market confidence returned.

The improved economic environment, he said, has also encouraged investment and supported recovery across key sectors, including tourism, agriculture and financial services, which continue to play a major role in driving growth and creating employment opportunities.

Despite the gains, Kiptoo acknowledged that the government still faces significant fiscal challenges as demand for public services outpaces revenue growth.

"Everybody wants money for roads, water and other services, yet revenues are not growing as fast as expenditure needs," he said.

"We, therefore, have to finance budget deficits, but we remain committed to fiscal consolidation because it is in the country's best interest to reduce debt and sustain economic stability."

He said fiscal consolidation remained one of the government's priorities as it seeks to gradually reduce borrowing while ensuring essential development projects and public services continue to receive funding.

Kiptoo also said Kenya had so far escaped severe economic disruption arising from the ongoing tensions in the Middle East because of measures taken over the past three years to strengthen the economy and improve preparedness.

He said the government had put in place strategies to guarantee adequate energy supplies and cushion the country against possible disruptions in global oil markets, noting that economic resilience built in recent years had helped minimise the impact of external crises.

The Treasury PS further observed that Kenya continued to attract growing international interest, pointing to increasing tourist arrivals and expanding opportunities in export markets.

He said the government had negotiated improved market access through trade arrangements with the European Union, the African Growth and Opportunity Act and China, urging businesses and producers to take advantage of the opportunities to expand exports and increase foreign exchange earnings.

"We have a great country and we have no other country but Kenya. Every time we face challenges, we overcome them because we are resilient. Let us continue promoting unity, love one another and work together for the good of our nation," Kiptoo said.

Forestry PS Gitonga Mugambi echoed the call for unity, saying national cohesion and patriotism were essential for the country's continued development.

"We have a duty to love our country and take care of one another. Whatever our differences, we are one people and we are all Kenyans," he said.

The two Principal Secretaries spoke during the burial of the late Josphat Njagi, father of Kenya Forestry Research Institute chief executive officer Jane Njuguna, in Gichugu, Kirinyaga county.