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Kenya growth rate expected to be 5.2 per cent, according to Sterling Capital analysts

They cite efforts by the Central Bank of Kenya to lower domestic borrowing through rejection of aggressive investor bids at debt auctions

Kenya’s economy would grow by more than 5.2 per cent in 2025 mainly due to reduced borrowing and reduced government budget deficits, and stable macro-economic fundamental, a study by Sterling Capital reveals.

According to Sterling Capital Kenya, stable macro-economic fundamentals led by low inflation rates, stable foreign exchange rate, declining cost of servicing domestic debt, and declining global benchmark interest rates.

The macro-economic fundamentals concepts and principles describe how the economy functions as a whole. They include factors that affect the economy’s performance, such as inflation, unemployment, and interest rates.

Sterling Capital Kenya analysts say efforts by the Central Bank of Kenya to lower domestic borrowing through rejection of aggressive investor bids at debt auctions and National Treasury borrowing from external sources to reduce pressure on the domestic debt market are some of the reasons for expected growth.

“Kenya stability and decline in the global interest rates will support the return of foreign capital into the Kenya debt market. More re-openings than new debt issues most of which will be medium to long term.

So far, National Treasury, World Bank, Cytonn Investment, CBK have projected growth rate of the economy to be 5.3 per cent, 5.1 per cent, 5.4 per cent, and 5.5 per cent respectively.

According to the World Bank, and national government, the economic growth will be supported by resilient agriculture sector performance, services sector performance and improved exports.

It is estimated that the overall balance of payments surplus at US$.46 million (Ksh5.95 billion) in 2025 will result in a buildup of reserves by US$333 million (Ksh43.040 billion) which is ideal for foreign exchange reserve at CBK.

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Sterling Capital discloses that the National Treasury estimates that the total public debt estimates for the 2024/25 fiscal year to be realistic, that is assuming that the Ksh768.6 billion deficit is fully financed bringing total public debt in the range of Ksh11.3 – 11.4 trillion.

 

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