Treasury Cabinet Secretary John Mbadi alongside Principal Secretary Chris Kiptoo and Central Bank Governor Kamau Thugge on Tuesday held a meeting with officials from the International Monetary Fund (IMF) during the ongoing World Bank and IMF annual summit in Washington DC, the United States.
During the meeting, the delegation provided a comprehensive update on Kenya’s economic progress and reform efforts under its IMF-supported program and emphasised the country's commitment to fiscal consolidation and economic recovery.
The CS addressed the economic challenges that crippled the country in the recent past, including inflation, currency depreciation, and mounting public debt. Mbadi emphasized that Kenya was on the path to recovery, with several interventions put in place by President William Ruto’s administration.
According to CS Mbadi, the key reforms focused on agriculture, housing, healthcare and the digital economy which he noted began bearing fruit with the economy growing by 5.6 per cent in 2023, up from 4.9 per cent the previous year. Mbadi noted that the country's economy was expected to grow by 5.2 per cent in 2024 and 5.4 per cent in 2025.
Despite positive strides, Mbadi acknowledged ongoing fiscal challenges, including a revenue shortfall of Ksh 29.6 billion by August 2024. He cited delays in implementing key reforms as contributing factors and outlined the government's revised fiscal framework.
The CS reaffirmed Kenya’s commitment to reducing the deficit to below 3 per cent of the Gross Domestic Product (GDP) through fiscal consolidation efforts.
The finance minister added that the government remained focused on enhancing domestic revenue collection and improving tax administration, especially through the automation of processes at the Kenya Revenue Authority (KRA).
He further emphasized the importance of maintaining proper spending while prioritizing public expenditure, alongside reforms aimed at state-owned enterprises and public-private partnerships to reduce fiscal pressures.
During the same meeting, CBK Governor Kamau Thugge outlined the measures taken by the Central Bank to stabilize inflation and exchange rate pressures.
Thugge disclosed that in early 2024, the Monetary Policy Committee (MPC) raised the Central Bank Rate (CBR) to 13 per cent to curb inflation before adjusting it by 25 basis points to 12.75 per cent in August as inflationary pressures eased.
The governor informed the IMF officials that Inflation dropped to 3.6 per cent by September 2024, down from 6.8 per cent compared to last year, while the Kenyan Shilling appreciated significantly to stabilise between Ksh 128 and Ksh131 per United States dollar, from Ksh 160.8 in January 2024.
Governor Thugge also highlighted the resilience of Kenya’s foreign exchange reserves, which currently stand at $7.97 billion, bolstered by a 17 per cent increase in remittances from the diaspora. According to Thugge, the reserves provided critical support for import cover and acted as a buffer against short-term economic shocks.
