However, the IMF said Kenya needs to put in place “an effective framework for natural resource management, in light of recent oil and gas discoveries”.
The IMF said Kenya’s economy has “continued to expand in a stable economic environment” supported by an increase of credit to the manufacturing sector and “growing foreign investor interest”.
According to the IMF, the economy’s rate of growth rose to 5% in 2013-14 “and is expected to gain further momentum” over the following year driven by higher domestic and external investment.
Following the successful first-time issue of a $2 billion Eurobond last June, Kenya’s international reserves “reached some four-and-a-half months of prospective import coverage”, the IMF said. “Kenya’s financial sector remains robust, the process of financial inclusion is ongoing, and efforts to develop Nairobi into a regional hub have advanced with Kenya’s recent removal from the Financial Action Task Force’s watch list.”
The 2013-14 central government deficit remained broadly unchanged compared to the previous year at nearly 6% of gross domestic product, the IMF said. A new quarterly reporting framework for budget execution by Kenya’s counties “will help to address transitional challenges for public financial management” posed by a devolved system of government that began in March 2013, it said.
The IMF said it encouraged Kenya’s authorities “to maintain the momentum of structural reforms and to continue their efforts to remove remaining infrastructure bottlenecks, in order to mitigate vulnerabilities to weather-related shocks and improve competitiveness”.
The African Development Bank said in a report published this year that recent discoveries of oil, gas and coal could help propel Kenya to “middle-income country status in the medium term”.
The Bank said in its Country Strategy Paper for Kenya for 2014-18 (53-page / 1.15 MB PDF) that it wanted to work with development partners and the private sector to “leverage funding” for infrastructure development in Kenya, rather than act as a sole financier.