A series of missed forecasts on these indicators has however triggered debate on the actual status of Kenya’s economy with the International Monetary Fund (IMF) calling for a review of the MTBF to help tackle poverty and widen growth.
National Treasury Cabinet Secretary Henry Rotich however defended the country’s forecasts saying it was a standard practice to review medium-term projections, especially GDP, revenue and fiscal deficits due to unforeseen risks.
The Treasury has defended its macro-economic forecasts amid concern over the accuracy of its projections.
Inflation, revenue, expenditure and GDP growth are key indicators of economic performance and help shape budgets and planning to ensure sustainable development.
Kenya has since 2000 relied on a three-year medium term budget framework (MTBF) for economic planning.
A series of missed forecasts on these indicators has however triggered debate on the actual status of Kenya’s economy with the International Monetary Fund (IMF) calling for a review of the MTBF to help tackle poverty and widen growth.
In a working paper last week, the IMF urged Kenya and other sub-Saharan countries to significantly improve the accuracy and reliability of their forecasts on inflation, revenue, expenditure and fiscal deficits to improve the credibility of their medium-term fiscal frameworks.
National Treasury Cabinet Secretary Henry Rotich however defended the country’s forecasts saying it was a standard practice to review medium-term projections, especially GDP, revenue and fiscal deficits due to unforeseen risks.
“There’s nobody who can get it accurately. Even the IMF themselves never get it right when it comes to global growth,” Mr Rotich said.
“The whole thing is managing risks not the accuracy of the forecast,” he said. The Treasury, for example, is expected to revise downwards the growth outlook for this year to below 5.5 per cent after official half-year GDP data is released by the end of the month, a downgrade from 6.5 per cent two years ago.
Mr Rotich said the downgraded growth forecast is due to effects of repeat presidential polls, prolonged drought and the fallworm invasion of maize plantations, developments “which no one saw coming”.
The IMF paper, which assessed progress of implementing the MTBF in Kenya, South Africa, Tanzania, Uganda, Namibia and Zambia suggests the countries, except South Africa, were lagging in MTBF performance despite “promising start”.
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