APRM • SECOND COUNTRY REVIEW REPORT OF THE REPUBLIC OF KENYA 2.2 Economic Governance and Management 2.4 Kenya has achieved significant progress in strengthening the economic governance and management of the country. The Government of Kenya 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 and is in harmony with international best practice such the IMF public expenditure classification as epitomized in the IMF Government Financial Statistics (GFS) Manual. However, the Government needs to establish a central database of all standards and codes, and the information should be posted on the websites of the Office of the Attorney General, the Kenya Law Reports, and relevant international organisations. 2.5 The adoption of the Kenya Vision 2030 in 2008 as the long-term strategy to attaining sustainable 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 development much more directly. In the plan, attaining macroeconomic stability is recognized as a key enabler of achieving the goals of the plans. Macroeconomic stability is emphasized. 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 key sectors, supported by a fiscal policy framework that allocates resources in line with the policy objectives. 2.6 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 percent during 2011-2015, a strong recovery from the dismal performance in 2008 that followed the post-election violence. 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. Fiscal policy is aimed at increasing spending on infrastructure to encourage diversification of the economy and to enhance tax collection. Fiscal decentralisation has been an integral part of fiscal reforms. Kenya commands positive investment climate. Kenya’s trade policy appropriately spells out the aspiration for poverty reduction and sustainable economic growth. 2.7 Despite all these laudable programmes and aspirations, economic policy management faces challenges. The levels of poverty, inequality and unemployment remain high, particularly among vulnerable groups and the rural cohorts. Inequality is high and manifests itself in various forms. This suggests that the current economic policies and management practices have not been inclusive. The economic policy framework therefore needs to incorporate a resource redistribution policy in order for the economic development plans to deliver economic well-being that is inclusive, particularly to address poverty, inequality among different groups and regions, as well as provide productive employment. | 34 |