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Forget the noise, Kenya’s debt is sustainable, says IMF

Kenya’s debt situation is still sustainable, the International Monetary Fund says.

IMF Kenya representative Armando Morales said in Nairobi on Thursday that the country is still far from alarming “stress risks” at below a 50 per cent of the debt to GDP ratio.

Mr Morales said Kenya is expected to exhibit resilience against continued volatility in the global market based on its structural advantages in the economy.

“We still expect Kenya will continue growing comfortably. The region is affected by several shocks but Kenya has an advantage in that the budget is not linked to oil prices and China is not one of its main export markets,” said Mr Morales.

The IMF however forecasts it may reduce Kenya’s economic growth for 2016 based on the prevailing harsh economic conditions.

He said that while the country may witness depressed economic growth compared to earlier projections made by the multi-lateral lender, it will be shielded against the current ups and downs in the global economy.

“The revision of the (economic growth) will be probably downwards because the situation globally and regionally is more negative; we don’t expect a major revision,” said Mr Morales when the fund released its earlier published regional economic outlook for sub-Saharan Africa in Nairobi.

The International Monetary Fund in September revised downwards its economic growth projection for Kenya in 2015 from an earlier estimate of 6.9 per cent to at least six per cent, citing the depreciating shilling and the dwindling tourism numbers.

It also trimmed 2016 numbers from 7.2 per cent to 6.8 per cent.

The government has also since cut its own economic growth projection this year down to 5.3 per cent in April, from an earlier estimate of 6.5 per cent.