Kenya’s economy to grow by 6.9 per cent this year, says Treasury report

NAIROBI: The National Treasury has revised the country's growth prospects to 6.9 per cent this year, up from an initial target of 6.5 per cent.

According to a policy document released by the National Treasury, the Government aims to work with the Central Bank of Kenya (CBK) to ensure inflation is capped at five per cent and that the country has further sought a precautionary loan from the International Monetary Fund (IMF) to cushion the economy against any shocks in the coming months.

The improved projected wealth will see the 47 Counties receive an additional Sh46 billion in the 2015/2016 financial year, way above what it received last year. This extra cash will enable the devolved units fund more development projects at the county level.

According to the policy document, the additional funds are meant to support newly devolved functions that the counties have since taken up.

"The share of revenue raised nationally and allocated to county governments has grown steadily from Sh193.4 billion in the 2013/2014 financial year to Sh228.5 billion in the current year and is expected to increase to Sh274.1 billion in the 2015/2016 financial year," indicated the Treasury's Budget Policy Statement that is expected to be tabled before Parliament when it resumes.

The new allocations make this the largest disbursement the new administrative units have received since they came into being two years ago.

The Government has outlined a raft of policy interventions to prop up the country's manufacturing, agricultural and financial industries in order to fuel more growth in these sectors.

These include leasing 800 motor vehicles in the 2015/2016 financial year and thereafter 500 motor vehicles annually with 40 per cent of them sourced from the local market.

The Government has since tried to attain a sustained growth of six per cent for the last three years but has since been unable to maintain this momentum as a result of a slump in the tourism, coffee and tea sectors, which are the country's top foreign exchange earners.

The Government is aiming at capitalising on the falling oil and food prices and harmonisation of the tax policy to surpass the psychological 6.5 per cent growth figure this financial year.