Oil Price Fluctuations Threaten Vision 2030

By: EW News Desk Team   Date: 12 May 2011

About The Author

EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

  • Dot Div
  •      
12 May 2011

Food and fuel price volatility pose the biggest challenge to maintaining steady economic growth which is key to achieving the development blueprint of Vision 2030, the World Bank has said.

The government faces the task of finding innovative ways to cushion Kenya against high international petroleum and food prices to safeguard the country’s progress to a middle income status.

The bank’s country director, Mr Johannes Zutt, said the rising cost of food and oil prices in the international market had filtered into Kenya’s economy, weakening the country’s ability to achieve the higher growth envisaged under Vision 2030.

To get to middle income status envisaged under the long-term development blueprint, the country must maintain an annual growth rate of at least six per cent up to 2020, Mr Zutt said in Nairobi Wednesday.

Since 2002, Kenya’s growth has been anchored on strong economic governance, but the kind of pressure that food and oil prices now exert means some of the economic indicators will be too weak to support average growth targets from this year onwards, Mr Zutt said after the government released the Second Annual Report indicating above average performance in implementing medium term goals.

Kenya must also maintain its increased investment in physical infrastructure like ICT, energy, roads and sea ports to sustain a high growth path, he said, adding this will make it possible for Kenyans to start earning $1000 (Sh80,000) on average by 2030.

The progress report covers the last two financial years. It indicates that the Government consistently surpassed its targets on revenue collection, development spending, broad money supply to the economy and credit to private sector over the period.

The government also stayed within its target on current account (difference in value of exports and imports), and external debt management.

But the country has failed to meet its target for real GDP growth, employment creation, overall inflation, import cover and national savings.

Under the social pillar, the government has surpassed its target for teacher recruitment, enrolment of students in schools, rehabilitation of learning institutions, teacher training, and child mortality rate.

“The country already has numbers and it is very important that the Government is clear about how to move forward from there,” said Mr Zutt.

The World Bank’s concerns comes just days after the International Monetary Fund released its latest study last week showing Kenya has borne the heaviest brunt of the rising international food prices in Sub Saharan Africa.

Article By George Omondi originally appeared on Business Daily Africa.

Read about Kenya's Economy on EconomyWatch.


  • Dot Div
  •      

Most Popular in Industries & Business

Related Links
blog comments powered by Disqus