Hope for Kenyans as World Bank predicts economy perfomance

The World Bank projects that Kenya’s gross domestic product will grow at an average rate of 5.2% from 2022 to 2024.

President William Ruto at State House on September 26, 2022

The World Bank has signalled a positive outlook of Kenya’s economy for the period between 2022 to 2024.

The World Bank projects that Kenya’s gross domestic product will grow at an average rate of 5.2% from 2022 to 2024.

The lender also predicts that growth in real per capita incomes will help reverse the rising poverty rates caused by the pandemic.

Per capita income is a measure of the amount of money earned per person in a country.

Poverty is expected to fall to 33.4 per cent in 2022, below the pre-crisis level of 34.4 per cent (2019),” the document reads.

The World Bank said an increase in agricultural harvests would drive food processing, sustain export growth, help anchor inflation expectations, and support households’ consumption.

President William Ruto has said his administration would prioritise food production and move away from rain-fed agriculture that has been severely affected by climate change.

The World Bank encouraged the government that progress in terms of fiscal consolidation would bolster investor confidence, with the fiscal deficit expected to narrow to 4.4% of GDP by the 2023/24 financial year.

Fiscal Consolidation refers to the policies undertaken by governments at both the national and county levels to reduce their deficits and accumulation of debt.

Public debt is expected to decline as a share of GDP from 68.2% in 2022, to 63.9% in 2024, due to economic growth, fiscal consolidation and reduced borrowing costs

The government has been applying a mix of methods to tighten its fiscal risks including expenditure restraint and enhanced revenue measures, including further rationalization of tax expenditures and the introduction of a digital tax

Tax expenditures are indirect expenses by the government through the tax system aiming to achieve certain economic or social goals by creating exceptions to the tax system, thereby reducing government revenue and increasing taxpayer wealth.

The World Bank also said that lower domestic borrowing by the government will create more room for banks to finance private sector investment.

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