Finance Manager
Fiscal Policy in Kenya: Looking Toward the Medium-to Long-Term
By Kamau Thugge, Peter S Heller, and Jane Kiringai[1]
Executive Summary
Kenya’s authorities, in articulating their vision for the next two decades of Kenya’s development, understood clearly that fiscal policy would need to play a critical role in influencing the pace at which the economy will grow and its capacity to deal with the key challenges that will arise over the next several decades. Domestic policy challenges include a high population growth, rapid urbanization, significant weaknesses in infrastructural capacity, inadequate levels of investments, and pressures for decentralization. External challenges include security risks as well as an uncertain global economic growth environment. Fiscal policy will not only affect macroeconomic stability, but also whether Kenya can transition to a higher economic growth path, reduce its high poverty rate, and address its substantial income, asset, and regional inequalities.
The paper by Thugge, Heller and Kiringai examines whether Kenya’s medium-term fiscal policy strategy is responsive to addressing the potential scale of the challenges confronting Kenya, particularly given the inevitable uncertainties assicuated with the global economic environment. It also takes stock of the impact of recent developments on the viability of the original strategy.
Kenya is likely to face in the next two decades and the scope of its policy goals for this period. Section II will briefly identify both the domestic policy challenges that Kenya’s fiscal policy-makers must address in coming years as well as the different potential external policy environments within which these policies must be formulated. Section III reviews the Government of Kenya’s (GOK) fiscal policy strategy, as broadly embodied in its recently issued long-run perspective--Vision 2030, but more concretely in the Medium Term Plan for 2008/09-2012/13 and the Medium-Term Budget Strategy Paper
By Kamau Thugge, Peter S Heller, and Jane Kiringai[1]
Executive Summary
Kenya’s authorities, in articulating their vision for the next two decades of Kenya’s development, understood clearly that fiscal policy would need to play a critical role in influencing the pace at which the economy will grow and its capacity to deal with the key challenges that will arise over the next several decades. Domestic policy challenges include a high population growth, rapid urbanization, significant weaknesses in infrastructural capacity, inadequate levels of investments, and pressures for decentralization. External challenges include security risks as well as an uncertain global economic growth environment. Fiscal policy will not only affect macroeconomic stability, but also whether Kenya can transition to a higher economic growth path, reduce its high poverty rate, and address its substantial income, asset, and regional inequalities.
The paper by Thugge, Heller and Kiringai examines whether Kenya’s medium-term fiscal policy strategy is responsive to addressing the potential scale of the challenges confronting Kenya, particularly given the inevitable uncertainties assicuated with the global economic environment. It also takes stock of the impact of recent developments on the viability of the original strategy.
Kenya is likely to face in the next two decades and the scope of its policy goals for this period. Section II will briefly identify both the domestic policy challenges that Kenya’s fiscal policy-makers must address in coming years as well as the different potential external policy environments within which these policies must be formulated. Section III reviews the Government of Kenya’s (GOK) fiscal policy strategy, as broadly embodied in its recently issued long-run perspective--Vision 2030, but more concretely in the Medium Term Plan for 2008/09-2012/13 and the Medium-Term Budget Strategy Paper
References: International Monetary Fund, Ex Post Assessment of Longer-Term Program Engagement (2008) ______, Kenya: Staff Report for the 2008 Article IV Consultation (2008) as well as Selected Issues Paper (2008) -------- and World Bank, Joint IMF/World Bank Debt Sustainability Analysis International Monetary Fund, 2004, Public Investment and Fiscal Policy (Washington DC) International Monetary Fund: Request for Disbursement Under the Rapid-Access Component of the Exogenous Shocks Facility: Staff Report (June 2009) IMF country Report No. 09/191 Kenya, Government of, Medium-Term Plan, 2008/09-2012/13 (2008) Kenya, Government of, Medium-Term Budget Strategy Paper, 2008/09-2010/11 (May 2008) Kenya, Government of, Medium-Term Budget Strategy Paper, 2009/10-2011/12 (June 2009). Tchakarov, Ivan, 2007, “Public Investment in Thailand: Macroeconomic Effects and Implementation,” in Thailand: Selected Issues, IMF Country Report 07/231 (Washington DC) World Bank, Kenya: Accelerating and Sustaining Inclusive Growth (Report No