2012年-IMF国际货币组织全球_Kenya_2011_Article_IV_Consultation_Second_Review_Under_the_Three_89页_1mb

Summary of Kenya: 2011 Article IV Consultation, Second Review Under the Three-Year Arrangement Under the Extended Credit Facility and Requests for Modification of Performance Criteria and Augmentation of Access

Core Content

This document summarizes the 2011 Article IV Consultation for Kenya, including the Second Review Under the Three-Year Arrangement under the Extended Credit Facility (ECF) and the requests for modification of performance criteria and augmentation of access. It also includes the Executive Board discussion, Public Information Notice (PIN), and the statement by the Executive Director for Kenya.

Main Views and Key Information

Economic Context

• Kenya's economy continued to expand in FY 2010/11, with GDP growth estimated at 5.3%.
• The economy faced sharp inflationary pressures and exchange rate depreciation due to:
  • Severe drought in the Horn of Africa, which affected domestic food supplies and increased import costs.
  • High international commodity prices, especially food and oil.
  • Strong domestic demand, fueled by rapid credit expansion in the private sector.
• Inflation reached 18.9% in October 2011, well above the CBK target range of 5 ± 2%.
• Current account deficit widened to 9.5% of GDP in FY 2010/11, compared to 5.5% in the previous year.

Program Implementation

• The ECF program was approved on January 31, 2011, for SDR 325.68 million (120% of quota).
• All June 2011 targets were met, including fiscal consolidation and structural reforms.
• Monetary policy was initially delayed due to expectations of a reversal in food prices, but the CBK raised interest rates significantly from October 2011, leading to a tightening bias.
• The Central Bank of Kenya (CBK) has frontloaded the first disbursement of the ECF and requested augmentation of access equal to 60% of quota (total access: 180% of quota) to address the impact of the drought and higher-than-anticipated prices.

Key Challenges and Risks

• External vulnerabilities have increased due to:
  • Drought and its impact on GDP and balance of payments.
  • Persistent high import prices and weak global financial conditions.
• Macroeconomic imbalances have worsened due to:
  • Delayed monetary policy response.
  • Loose monetary conditions contributing to inflation and current account deficit.
  • Credit growth (up to 36% year-on-year in September 2011) and liquidity risks.
• Political and security risks include:
  • Upcoming 2012 elections.
  • International Criminal Court (ICC) hearings on 2007 post-election violence.
  • Military operations at the Somali border, which could impact tourism and budgetary position.

Policy Adjustments and Program Objectives

• The ECF-supported economic program aims to:
  • Rein in inflation and stabilize the exchange rate.
  • Reduce domestic demand to align with available resources.
  • Consolidate the fiscal position, with the goal of reducing the public debt-to-GDP ratio to below 43% by 2013/14.
• Monetary policy will:
  • Maintain a tightening bias to bring inflation down to the target range (5 ± 2%) by end-2012.
  • Preserve the floating exchange rate regime and rebuild the international reserve buffer.
• Fiscal policy will:
  • Rationalize non-priority expenditure.
  • Expand targeted policies to protect the poor from inflation.
  • Frontload adjustment to temper domestic demand.

Structural Reforms

• PFM Law is ready for submission to the Commission on the Implementation of the Constitution.
• New VAT law is expected to increase revenue mobilization and minimize administrative costs.
• IFMIS is being implemented to enhance expenditure controls.
• Financial sector reform includes:
  • Strengthening cross-border supervision.
  • Enhancing risk management.
  • Reforming capital markets to improve access to financing for small and medium enterprises (SMEs).
  • Pension reform to transform the National Social Security Fund (NSSF) into a social insurance pension scheme.

Outlook and Recommendations

• The IMF staff recommends:
  • Completion of the review.
  • Modification of all performance criteria and indicative targets for the next 12 months.
  • Approval of the augmentation of access to 180% of quota.
• Risks to program implementation include:
  • Further global deterioration.
  • Heightened political tensions.
• Exchange rate stabilization is crucial to prevent economic disruption and growth slowdown.

Conclusion

The 2011 Article IV Consultation highlights Kenya's ongoing economic expansion, but it also underscores the increased external vulnerabilities, inflationary pressures, and exchange rate depreciation. The authorities are taking decisive steps to rein in inflation, stabilize the exchange rate, and consolidate the fiscal position, with the support of the IMF ECF program. Structural reforms are progressing, and the IMF staff supports the request for increased access to ensure the program's effectiveness in addressing the impact of the drought and high prices.