News Column

Kenya Needs Sound Mining and Monetary Policies - IMF

July 11, 2014

Richard Mungai

Kenya has to develop wise policies for natural resource management to mitigate geopolitical risks and weather related shocks, the International Monetary Fund mission to Kenya has said.

It told the government to also maintain a careful fiscal position consistent with the country's medium term debt targets and strengthen capacity building in public financial management. It said the measures will strengthen the economy's resilience from global shocks and support sustained growth.

"Once the recent oil and gas dis-coveries are confirmed to be commercially viable, they will have the potential to further accelerate economic growth and reduce drought related risk and investment risks due to political changes," head of the mission, Mauro Mecagni said.

He said Kenya's strong reform record and economic performance in recent years shows a sustainable growth that is key in reaching the Vision 2030 development targets.

"Policies need to consolidate macroeconomic stability, address infra- structure gaps, and support the integration of the country in the global economy," he said.

The IMF mission on Wednesday concluded a 14-day visit to Nairobi after holding consultation discussions with the state, the private sector and other stakeholders.

It advised the state to prioritise the implementation of the treasury single account, the adoption of the public financial management Act, a formal agreement between the cenpotential: Tullow Oil operations in Northern Kenya.

The country has discovered several oil deposits. tral government and counties on outstanding liabilities, and stronger oversight on the use of public resources.

"Accountability, compliance with laws and implementation capacity need to be further strengthened to maximize the benefits of devolved resources, improve the provision of public services and mitigate fiscal risks."

The lender assured that improving liquidity forecasting will help in anticipating changes in inflation and taking the best monetary policy decisions adding: "Maintaining a strong foreign exchange reserves position with exchange rate flexibility will further help to cushion the impact of potential shocks."

It lauded the state for a successful Eurobond issue saying, the ongoing process of financial inclusion has opened up the possibility of extending credit at more affordable rates to small and medium sized enterprises.

"Even though the economy faces some challenges, notably low rain- fall and insecurity that has affected tourism, the efforts to develop Nairobi into a regional hub for financial services have advanced.

This follows the strengthening of the an- ti-money laundering/combating the financing of terrorism framework and Kenya's recent graduation from monitoring process of the financial action task force," it said.

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Source: AllAfrica

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