* Economy to grow by at least 5 pct this year and 2013
* Official says election violence a risk
By Kevin Mwanza
NAIROBI, Sept 25 The International Monetary Fund
expects the Kenyan economy to grow by at least 5 percent this
year and in 2013, thanks to improving macroeconomic
fundamentals, a senior fund official said on Tuesday.
Soaring inflation, a slump in the shilling currency and the
subsequent high lending rates towards the end of last year cut
growth to 4.4 percent from 5.8 percent in the previous year, and
eroded investor confidence in east Africa's largest economy.
The IMF however cautioned that its growth forecast depended
on the east African nation carrying out a presidential poll
scheduled for next March in a peaceful manner.
The last such vote in 2007 was marred by violence after the
then opposition disputed the result, sparking violence.
"We believe with lower interest and inflation rates,
macroeconomic stability and improved confidence, we think that 5
percent should be well within reach," said Domenico Fanizza who
led an IMF visiting mission to Kenya.
"This (projection) assumes that the elections will be
smooth," Fanizza said.
The central bank embarked on an easing cycle in July this
year after inflation slid continuously since December and after
the shilling stabilised against the dollar, restoring a measure
of confidence in the economy and policymaking.
It cut the policy rate by 350 basis points to 13 percent at
the last rate-setting meeting earlier this month after inflation
declined for the ninth straight month to 6.09 percent.
Fanizza said a high buffer of reserves to $5.2 billion, or
4.14 months of import cover, by the central bank had built up
confidence in the country's economy.
Kenya's ministry of economic planning expects the economy to
grow by 3.5-4.5 percent this year while the Treasury is slightly
more optimistic, expecting a growth rate of 5.3 percent.
(Writing by Duncan Miriri; Editing by James Macharia)