The World Bank has downgraded Kenya’s economic growth estimate for this year to 4.7% on from an initial 5.0%, citing the impact of floods, anti-government protests and flailing fiscal consolidation efforts.
The international financial institution said in a new report that the East African nation has managed to stabilise its foreign exchange rate, boost hard currency reserves held by the central bank and lower inflation this year, but it still faces a high risk of debt distress.
Although the growth estimate for this year is lower than last year’s rate of 5.6%, it will still be higher than the sub-Saharan Africa average of 3.0%.
Kenya’s growth will, however, inch up to 5.1% in the medium term, it said, if the government successfully deals with the fiscal challenges.
The report discovered that the problems caused by a high debt load, the attendant servicing costs and flagging government revenues, the economy faces social unrest and financial risks,
eadly protests in June forced President William Ruto to abandon tax hikes meant to raise more than $2 billion in additional revenue, which dampened investor sentiment.
The bank also urged the government to tackle structural imbalances that hinder Kenya’s goal of sustained and inclusive growth that creates higher quality jobs for the people.
