IMF Calls for Safety Nets Amid Dim Regional Growth Outlook

Economic activity in sub-Saharan Africa is expected to slow down significantly in 2022 and remain relatively modest in 2023, which has undermined economic gains, the International Monetary Fund (IMF) has said.

IMF said the slow down will be driven by a raft of measures which include a meltdown in developed economies, tighter financial conditions in the global market and volatile commodity prices.

Abebe Aemro Selassie, Director of the IMF’s African Department said that looking ahead, the outlook remains highly uncertain and that countries are living on the edge, citing the latest Regional Economic Outlook for Sub-Saharan Africa.

“Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic. Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressure on policymakers in the region,” said Aemro Selassie.

Despite modest growth in recent years, the negative economic impact of Covid-19 and the Russia-Ukraine War means sensible policies are required to get Kenya back on the path to prosperity.

The government has already announced a raft of measures to address the emerging realities by cutting the budget by Sh300 billion as part of austerity measures.

Further, there are plans to grow the revenue collection to Sh6 trillion in the next five years as the state embarks on tax reform measures.

Currently, the government collects Sh2 trillion against a budget of Sh3.3 trillion with the deficit bridged through borrowing.

“We are going to reform the tax collection in the manufacturing space. KRA has very clear instructions from me about where we should go. In the next two years we should be able to grow our revenues from Sh2 trillion to Sh3 trillion and to double it in the next 3 years,” said President William Ruto.

Kenya National Bureau of Statistics (KNBS) data shows that the country’s overall rate of inflation in September stood at 9.2 percent compared to 8.5 percent in August and is hitting the Kenyan poor the most.

“The rise in inflation was largely due to increase in prices of commodities under food and non-alcoholic beverages (15.5 percent); transport (10.2 percent) and housing, water, electricity, gas and other fuels (7.3 percent) between September 2021 and September 2022,” it said in a statement.