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Krueger backs Kenyan reform efforts

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
December 2003
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In early December, Anne Krueger, the IMF’s First Deputy Managing Director, traveled to Nairobi to meet the Kenyan authorities and discuss the challenges facing the country and the government’s ambitions for economic progress. She also delivered the keynote address at the biannual meeting of the African Economic Research Consortium (AERC).

Krueger’s trip, her first to Africa since joining the IMF’s management team, came shortly after the IMF restored support for Kenya’s economic recovery program after a three-year absence. The year 2002 had seen the election of a new government with a strong political mandate for reform, and the new IMF-supported adjustment program is an indication of the progress made in starting on the reform agenda.

Krueger said she had useful discussions with President Mwai Kibaki and, separately, met with Finance Minister David Mwiraria and several of his colleagues. During the course of these talks, she highlighted the need to establish a sound macroeconomic framework. “Implementation is now crucially important,” she told reporters. “The government knows that the reform program on which it has embarked must be adhered to if the results that the citizens of Kenya want to see are to be delivered.”

The government, Krueger said, appears determined to stick with its commitments and to maintain the momentum behind its ambitious agenda of reforms. She congratulated the government on the start it had made in its fight to eliminate corruption in the judiciary and to improve the quality of governance. She encouraged the authorities to press ahead with public service reforms and to exert tighter control of public expenditure. “Getting ambitious economic reforms under way,” she said, “involves determination and not a little political courage.”

While in Nairobi, Krueger also met with the leader of the opposition, Uhuru Kenyatta, and some of his team. While stressing that his party had some policy differences with the government, Kenyatta made clear his support for the program agreed upon with the IMF and underscored the need to reform the Kenyan economy.

Reducing poverty

Krueger used the occasion of her speech to the AERC to praise the quality of research being conducted under the consortium’s auspices in universities across Africa, and she reiterated the IMF’s commitment to the AERC-IMF Visiting Scholars program, which has allowed more than 100 scholars to spend research time at the IMF. But the main thrust of her address dealt with poverty reduction in Africa in its broadest sense. She emphasized the importance of establishing a sound macroeconomic framework, but as a means to an end: economic growth that must deliver higher living standards and reduce poverty. “No macroeconomic framework can be stable over the long term if it fails to deliver growth,” Krueger pointed out. “So we in the IMF have become more focused in the way we help some of our poorest members.”

She also drew attention to the IMF’s Poverty Reduction and Growth Facility, but went on to challenge African countries—as she had the Kenyan government—to implement the wide-ranging reforms needed to deliver long-term growth. Krueger urged all developing country governments—in Africa and elsewhere—to press ahead with trade liberalization without waiting for the outcome of the Doha round. Trade liberalization, she said, “is an important factor in accelerating growth,” and countries engaged in trade protection hurt themselves above all. “The developing world should not—and cannot afford to—wait,” she said, pointing out that there were substantial benefits to be had if countries liberalized unilaterally. A successful outcome to Doha would deliver even greater benefits, two-thirds of which would flow to developing countries.

Tackling AIDS

Krueger also stressed that the IMF appreciated the extent to which AIDS has undermined economic progress. She explained that the IMF has pursued an active research agenda, in cooperation with other international institutions, that has focused on the economic, fiscal, and development aspects of the epidemic.

During her stay in Kenya, Krueger also visited a school in one of the poorer areas of Nairobi. On behalf of the IMF, she presented a donation of $5,000 to the Mt. Laverna Academy. The school, which is run by the Little Sisters of St. Francis, educates children from all religious and ethnic groups. Its has lost some of its teachers to AIDS and has opened its doors to children orphaned by the epidemic.

The full text of Anne Krueger’s remarks to the African Economic Research Consortium and her statement at the conclusion of her visit to Kenya are available on the IMF’s website (www.imf.org)

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