Kenya economic growth understated: Treasury official

Fri Nov 2, 2012 1:50pm GMT

By Duncan Miriri

NAIROBI (Reuters) - Annual growth rates in Kenya are probably about one percentage point more than official statistics show, a senior Treasury official said on Friday, adding that the ministry favoured a "gradual" easing of monetary policy.

Kenya's central bank has cut 500 basis points off its main interest rate since July and analysts are divided over how fast it will move in a bid to bolster growth further after upping rates to 18 percent last year to counter surging inflation.

The bank is independent but operates under broad targets set by the finance ministry, or Treasury, which also has a non-voting member who sits in at meetings of its rate-setting panel.

Geoffrey Mwau, who as the ministry's second most senior civil servant has served as its non-voting representative, told Reuters inflation was "where we (the Treasury) want it to be" after falling to just over 4 percent last month.

"Rains have been good and that is reflected in inflation consistently coming down. The shilling has stabilised. Our reserves are above four months imports equivalent. Our debt is manageable," he said in an interview on Friday.

"This year we expect 5 percent plus (growth)."

He said that growth in credit to the private sector has come dowm from a peak of 30 percent last year to close to official targets, without providing actual figures.

"It is a clear indication that the policies have worked and it is also an indication that you cannot turn around and say 'let us expand credit' you have to be gradual," he said.   Continued...

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi October 23, 2008. REUTERS/Antony Njuguna
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