Global recovery vital: Uhuru

Failure of the ongoing efforts to revive the Western economies will impact negatively on the country, the government has warned.

Finance minister, Uhuru Kenyatta, singled out the importance of the success of the stimulus packages being implemented in the West as the country braces for the effects of the global financial crisis.

“If the stimulus packages in the US and Western Europe take effect and turn their economies, they will help us weather the effects of the crisis,” Mr Kenyatta, who is also the deputy prime minister, said on Tuesday.

The American, European and Asian governments have been implementing a number of measures in a bid to jumpstart their economies.

For instance, despite pumping in billions of dollars since last year, the US Federal Reserve announced last week that it will be injecting another Sh80 trillion ($1 trillion) into the mortgage market and longer-term Treasury securities.

According to Mr Kenyatta, the recovery of those economies from their current recession will enable Kenya to weather the so-called second wave of the crisis.

“Since they are our major markets, any impact on the commodity market will definitely affect the prices our tea, coffee and horticulture,” he told the delegates to the Euromoney International Investment Conference being held at a Nairobi hotel.

The crisis has already seen the remittances from Kenyans in the diaspora drop sharply while the number of tourist arrivals and international aid have also been affected.

Maintaining that the economy will grow at between 3-3.5 per cent this year, the deputy PM said the government will cut on its non-core expenditures without affecting the growth.

“We don’t want to cut our expenditures to the extent that we will negatively impact on our ability to grow the economy,” he said.

He said the government targets private investors in key sectors such as infrastructure by offering them investment avenues such as the recent infrastructure bond.

Speaking at the function, the chief investment officer of the Old Mutual Investment Group, Mr George Apaka, called on the government to invest and institute policy interventions in agriculture.