A team from the International Monetary Fund (IMF), led by Benedict Clements, visited Kenya from October 19 to November 3, 2016, to conduct discussions on the first reviews under a precautionary Stand-By Arrangement and a Stand-By Credit Facility (SBA/SCF).
On March 14, 2016, the Executive Board of the International Monetary Fund (IMF) approved a 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. 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.
At the end of the visit, Mr. Clements released the following statement (paraphrased):“Kenya’s economy has continued to perform well, with real GDP growth reaching 6.1 % in the first half of 2016, up from 5.6 % in 2015. Growth was supported by favorable weather conditions, public investment spending, lower global oil prices, and a pick-up in tourism. Inflation has remained within the government’s target range, at 6.5 % in October.
“The external current account deficit (on a 12-month basis) declined to 5.5 % of GDP by September 2016 from 6.8 % in 2015. The exchange rate has remained stable and foreign exchange reserves have risen to US$8.2 billion (equal to 5.3 months of next year’s imports) as of end-September 2016. The banking system has remained stable.
“The mission welcomed the authorities’ plans to accelerate structural reforms aimed at (i) strengthening the efficiency and transparency of public spending, (ii) improving the monetary framework to facilitate the transition towards a modern inflation targeting framework, (iii) reinforcing banking supervision and regulation to ensure financial stability, and (iv) improving the quality of macroeconomic statistics, including fiscal reporting.
“Significant progress was made during the visit and discussions will continue in the coming weeks. The mission team thanks the authorities for their hospitality and cooperation and for constructive discussions.”
The team met with the Cabinet Secretary for the National Treasury, Mr. Henry Rotich; the Governor of the Central Bank of Kenya (CBK), Dr. Patrick Njoroge; the Principal Secretary for the National Treasury, Dr. Kamau Thugge; the Deputy Governor of the CBK, Ms. Sheila M’mbijjewe; members of the CBK Monetary Policy Committee, and senior government and CBK officials. Staff also had productive discussions with parliamentarians, representatives of the private sector, and development partners.