The international monetary Fund (IMF) has predicted that Kenya will witness an unprecedented inflation rate in January 2023.
The prediction was captured in a report released by the world lender on December 20, 2022, after reviews of arrangements that loaned Kenya Ksh55 billion under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
Read: Kenya Secures Ksh55 Billion Loan From IMF
However, IMF commended the country for its economic resilience, whose growth projection is projected at 5.3 percent in 2022, with the increased inflation being attributed to increased global oil prices in 2022.
“Inflation moved above the Central Bank of Kenya’s (CBK) target band in June and is expected to peak in early 2023. Despite double-digit export growth, the current account is expected to widen on higher global oil prices in 2022. Downside risks predominate in the near term, while Kenya’s medium-term outlook remains favourable although climate-related risks are elevated,” read part of the report.
The IMF said it approved the Ksh.55 billion loan to aid in post-COVID-19 recovery and address the debt vulnerabilities of Kenya.
“The EFF/ECF arrangements aim to support Kenya’s program to address debt vulnerabilities, the authorities’ response to the COVID-19 pandemic and global shocks, and to enhance governance and broader economic reforms.” The report said.
Read: Kenya’s IMF Loan Terms To Be Reviewed By Senate
However, the IMF castigated the country’s unbudgeted spending during the last days of President Uhuru Kenyatta’s tenure, which is said have become a burden to the budget.
“However, obligations carried over from last fiscal year and an increase in unbudgeted spending in early FY2022/23 increased pressures on the budget. The new administration of President Ruto has reasserted Kenya’s commitment to fiscal consolidation, targeting a lower overall fiscal deficit than the original budget,” said IMF.
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