NAIROBI: When a country’s economy is growing by more than 5 per cent a year and it has at least 600 million barrels of oil then it is hard to avoid triumphalism.
It puts politicians in the enviable position of being able to promise Kenyans great things today and great things tomorrow. The consensus is that, having grown by a fraction under 5 per cent over the last three years, the country’s economy will grow by around 6 per cent in 2015.
That, at least, is the view of the World Bank and the International Monetary Fund (IMF), as well as the Jubilee Government.In its Global Economic Prospects report published in January, the World Bank forecasts that Kenya’s growth rate would be boosted by higher public investments and the recovery of the agriculture and tourism sectors.
But is there a bit too much optimism about the economy Not enoughThe reality is that not all the charts are pretty to look at. Kenya’s current account and overall deficit levels have been well into the red for a number of years.
A briefing paper by US banking giant Citigroup, titled Kenya on the Cusp, focuses on the “nagging doubts” about the country’s twin deficits its current account and fiscal deficits which it cites as the main challenges to the country’s economic performance over the next decade.
The trouble for Citigroup and other analysts is that the relatively high growth rates are still not nearly enough for the Government to be able to balance its books.As Citigroup’s report puts it, the Jubilee Administration is “still struggling to achieve fiscal consolidation, with a widening current account deficit”.
