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Submitted by Wolfgang on
Dear friend, You have lots of good questions. Please note that all my blogs have a standard format (about 900 words and one defining charts; also because they are published in the Saturday Nation and need to be limited). Our Economic Reports have more in-depth analysis and you can find them under www.worldbanmk.org/kenya/keu. We will launch the next report early December. Here some quick reactions: 1. General economic challenges in Kenya: There is not one silver bullet to get the Shilling back into stable waters, also because the reasons for the decline was a combination of factors: structural current account deficit, dramatic increase of imports, especially when oil prices were above $100, volatility in global financial flows since deepening of Euro crisis 2. IMF: The IMF’s financing will help to stabilize the Shilling, especially if it is coupled with other measures, such as higher interest rates 3. What’s wrong with the Shilling? The current Account deficit (too many imports, too little exports) or an economy “flying on one engine” (see the blog and our economic report) 4. Anti-Money Laundering: Unlikely that it is connected to the drop of the Shilling. Tighter Anti-Money laundering may actually help the Shilling if Kenya would attract more “credible” international investment. Also, some of the illicit financial flows to Kenya have been overstated. The basic problem is very simple: Imports are too large, exports too little. Kenya needs to export more and start its “manufacturing engine” then the economic parameters will change Hope this helps Wolfgang