APRM • SECOND COUNTRY REVIEW REPORT OF THE REPUBLIC OF KENYA CHAPTER FOUR 4. ECONOMIC GOVERNANCE AND MANAGEMENT 4.1 Overview 274. The significance of the economic governance and management pillar derives from the recognition by African Heads of State and Government that good economic governance, including transparency in financial management, is an essential pre-requisite for promoting socio-economic development and reducing poverty. Against this backdrop, Kenya has, in recent times, taken steps that have strengthened the economic governance and management of the country. It has signed and ratified most of the Standards and Codes relating to economic governance and management including the African Union Convention on Preventing and Combating Corruption. However, the classification of government expenditure data is yet to be harmonized with international best practice as epitomized in the IMF Government Financial Statistics (GFS) Manual. The Government needs to establish a central database of all standards and codes, and the information should be posted in the websites of the Office of the Attorney General, the Kenya Law Reports, and relevant international bodies. 275. Adoption of the Kenya Vision 2030 in 2008 as the long-term strategy to attaining sustained socio-economic development has strengthened the economic policy framework. Economic policy is now aligned with the goals of the five-year Medium Term Plans, which is the implementation framework of the Vision 2030, and reflects the government’s plans to deliver socioeconomic development. This has allowed the setup of economic policy to be appropriately reoriented towards the developmental goals of securing socioeconomic economic development much more directly. In the plan, attaining macroeconomic stability is recognized as a key enabler of achieving the goals of the plans. Therefore, design and setup of macroeconomic policy is appropriately directed at achieving and sustaining macroeconomic stability. In this regard, monetary policy is tasked to deliver price stability and promote financial system stability, which should anchor the long-term growth of the economy. The sectoral objectives are to be achieved through a range of sectoral policies covering each of the six key sectors, supported by a fiscal policy framework that allocates resources in line with the policy objectives. 276. The reconfiguration of the economic policy framework has facilitated achievement of a number of milestones in terms of macroeconomic performance. Economic growth averaged 5.5% during 2011-2015, a better record from the slow growth prior to 2011. The government of Kenya has succeeded in reducing fiscal deficit to a range of 4% of GDP, but public debt has increased, although it still remains within manageable levels. Inflation has been kept in a single digit. Macroeconomic stability has generally been sustained, with monetary policy tasked to achieve price stability to maintain long-term growth. Fiscal policy is aimed at increasing spending on infrastructure to encourage diversification of the economy and to enhance tax collection. Fiscal federalism has been an integral part of fiscal reforms. Kenya | 133 |