Poor signals on economic front

Lack of progress on the main contentious issues between the Kenyan government and the IMF, namely on two anti-corruption bills and on the privatisation of Telkom Kenya, do not bode well as the IMF is due to visit for a routine review of progress before the end of July, the Economist Intelligence Unit (EIU) reported on Monday. Though real Gross Domestic Product (GDP) was expected to “edge up gently to 2 percent in 2001”, as a result of good rains this year after successive years of drought, economic growth would still compare badly with an initial growth target of 6 percent, the report stated. The country’s current account deficit was forecast to rise slightly, as was the trade deficit and total debt, while the exchange rate of the Kenyan shilling was forecast to slide further against the US dollar, from an average 81-plus to the dollar this year to around 84.1 in 2002, the EIU added. An average of 20,000 Kenyans were losing their jobs each year as a high cost base, poor infrastructure and growing insecurity caused multinational enterprises to shift their operations from Kenya, and many other firms to close down or go into receivership, the ‘EastAfrican’ newspaper reported on Monday.

On the political front, the EIU forecast that President Daniel arap Moi would consolidate his grip on power, building alliances between his Kenya Africa National Union and other parties. Moi’s appointment of members of the National Development Party - including its leader, Raila Odinga - to government “has set the stage for a coalition-type government for the first time in Kenya’s post-independence history,” it stated.