Kenya cuts growth forecast to 6%

KENYA’s Finance Minister Amos Kimunya cut his 2008 economic growth forecast on Wednesday to 6%, from 7% previously, after rioting and ethnic clashes earlier this year hit the country’s economy.

“We had projected up to 6% and god willing we could actually exceed that,” Kimunya told Reuters after a news conference on the outlook for the 2008/09 budget. He did not specify the reason for the lower forecast.
Some analysts have said growth in 2008 would be only about half the estimated 6,9% in 2007, after the violence hurt key economic sectors following a disputed presidential vote last year.
Kimunya added that the inflation rate was going down, helped by falling food prices after post-election unrest disrupted transport, hampering food production.
He said since a power-sharing agreement was signed between President Mwai Kibaki and his opponent Raila Odinga to end the stalemate over the disputed presidential vote, food supplies had improved.
The power-sharing agreement, which Kibaki signed into law earlier this month, paves way for the creation of a prime minister’s position and two deputies and the sharing of cabinet posts.
In the past few days political analysts have expressed fears that the new cabinet would be bloated, and an extra burden to the government’s budget.
“But if that is the cost that Kenyans have to pay to achieve peace, to have stability into the future, then it may well be worth carrying those extra costs,” Kimunya said.
During the pre-budget meeting, treasury officials said they planned to increase allocations to areas like land reforms to boost growth in private business. — Reuters.