Treasury cuts Kenya growth forecast over insecurity

The government has cut its economic growth forecast for this year citing insecurity and poor performance of the agriculture sector.

The National Treasury Cabinet Secretary Henry Rotich said that the economy was now expected to grow at between 5 per cent and 5.5 per cent as opposed to an earlier forecast of 5.8 per cent.

Speaking during the launch of 2014/2015 budget groups at the Kenyatta International Convention Centre on Friday, Mr Rotich said the economy had faced serious challenges in the first half of the year that would have a significant effect on the overall annual growth.

“We have revised the growth projection downwards from 5.8 per cent in light of the performance in the first half of this year where growth has not been stronger than envisaged due to weak tourism performance and slow implementation of development programmes by both levels of government, among other factors,” Mr Rotich said.

Slow roll out of development plans resulted from low budget absorption due to poor planning by ministries and State agencies. Red tape in public procurement also had a hand in delaying implementation of projects.

As a result of the poor performance, he said, a review on revenue projections would be carried out.

“The implication of this is that the resource envelope may have to be reviewed. Details of this will be provided in the forthcoming budget review and outlook paper due by end of this month,” he noted.

Mr Rotich said the 2014 budget was prepared with the happenings in the Eurozone in perspective. Although economic growth had been recorded in some countries, he said, they were still struggling.

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Kenya’s economy had defied this sluggish growth trend to record 4.7 per cent jump last year, Mr Rotich noted.

This year’s budget, he said, put resources in priority areas.

“The 2015/2016 budget will intensify these efforts with more focus on development expenditure in energy, infrastructure, ICT, agriculture and social expenditure in education and health,” he said.

He added that the programme-based budget will focus on expected outputs of public spending. This, he noted, will strengthen the management of public resources.

“This requires greater accountability from managers of public resources who will from time to time be called upon to explain the manner in which they implemented programmes, achievements made, constraints faced and remedial actions taken,” he said.

The government officers are expected to provide budgets within the available resources and avoid putting money in less productive areas.