This 2001 Article IV Consultation highlights that Kenya’s economic performance during the past decade has been well below its potential. This reflects the failure to sustain prudent macroeconomic policies and the slow pace of structural reform. Consequently, Kenya’s real per capita GDP is now lower than it was in 1990, and poverty is much more prevalent. Executive Directors have commended the authorities for achieving a measure of macroeconomic stability during recent years, in difficult circumstances. To help obtain tangible results, they have stressed the importance of departing from the “stop-go” policies of the 1990s.

Africa is working toward the goal of creating a common currency that would serve as a symbol of African unity. The advantages of a common currency include lower transaction costs, increased stability, and greater insulation of central banks from pressures to provide monetary financing. Disadvantages relate to asymmetries among countries, especially in their terms of trade and in the degree of fiscal discipline. More disciplined countries will not want to form a union with countries whose excessive spending puts upward pressure on the central bank's monetary expansion. In T he Monetary Geography of Africa, Paul Masson and Catherine Pattillo review the history of monetary arrangements on the continent and analyze the current situation and prospects for further integration. They apply lessons from both experience and theory that lead to a number of conclusions. To begin with, West Africa faces a major problem because Nigeria has both asymmetric terms of trade—it is a large oil exporter while its potential partners are oil importers—and most important, large fiscal imbalances. Secondly, a monetary union among all eastern or southern African countries seems infeasible at this stage, since a number of countries suffer from the effects of civil conflicts and drought and are far from achieving the macroeconomic stability of South Africa. Lastly, the plan by Kenya, Tanzania, and Uganda to create a common currency seems to be generally compatible with other initiatives that could contribute to greater regional solidarity. However, economic gains would likely favor Kenya, which, unlike the other two countries, has substantial exports to its neighbors, and this may constrain the political will needed to proceed. A more promising strategy for monetary integration would be to build on existing monetary unions—the CFA franc zone in western and central Africa and the Common Monetary Area in southern Africa. Masson and Pattillo argue that the goal of a creating a s

This 2001 Article IV Consultation highlights that the fiscal and structural reform efforts in Gabon continued during 2001 under the government’s program supported by an 18-month Stand-by Arrangement, approved on October 23, 2000. Non-oil economic activity in Gabon rose by 4 percent in 2001, following a severe contraction in 1999 and a moderate recovery in 2000. Private investment picked up as confidence strengthened further, helped by substantial repayments of government domestic debt. Services, agriculture, and wood processing were the main sectors contributing to growth.

Kenya’s medium-term economic outlook remains positive, supported by the authorities’ continued firm commitment to their economic program amidst a complex environment. Economic recovery is well underway, but Kenya’s Sustainable Development Goals (SDGs) have suffered significant setbacks, and poverty has increased. The authorities see the program as providing essential support for sound fiscal management ahead of the 2022 elections, reinforcing their multi-year fiscal consolidation plan to reduce debt vulnerabilities and preserve priority social and development spending.

Kenya showed low economic performance owing to governance problems and the slow pace of structural reforms. Executive Directors emphasized the need to lower public debt and tighten fiscal and monetary policies. They commended the anticorruption strategy and advised to improve governance, reform the tax system, and ensure fiscal sustainability. They stressed the need to align the Poverty Reduction Strategy Program (PRSP) to the budget and to strengthen public expenditure policy and banking supervision. They welcomed the decision of implementing the full PRSP and emphasized the need to implement the program without interruption.