IMF's New Growth Paradigm: Kenya And Tanzania

Tyler Durden's picture

For those who still wonder why China has given up on Europe, and is solely focusing on Africa (where none other than Goldman Sachs is opening more offices than any other bank), the IMF explains why the Berlin Beijing Conference 2.0 is now in its peak, if entirely behind the scenes. And yes, the "developed" world wishes it was one big banana republic. Amazing what not having 100%+ debt/GDP will do for one's economic prospects...

From the IMF WEO:

Resilient Growth in Low-Income Countries: Kenya and Tanzania

Kenya and Tanzania are among the group of emerging market and developing economies that showed marked resilience during the Great Recession. Both outpaced earlier advanced economy growth, experienced only a modest growth slowdown during 2008–09, and have charted a subsequent rapid and robust recovery (Figure 4.3.1, panel 1).

A decade of improved macroeconomic stability has helped underpin this resilience. In Tanzania, reforms since the late 1990s liberalized foreign exchange and financial markets and foreign trade, and diminished the role of parastatals. Inflation fell from 20 to 30 percent in the 1990s to 5 percent in the mid-2000s, fiscal revenues increased from 10 to 15 percent of GDP, and gross reserve cover broadly doubled. With the help of the IMF’s Heavily Indebted Poor Country/Multilateral Debt Relief Initiative, the debt burden was also halved in relation to GDP. In Kenya, reforms started earlier, with a major program to liberalize price controls, import licensing, and exchange restrictions, as well as steps to privatize parastatals and reduce civil service numbers. As a result of prudent fiscal policy, Kenya’s public debt fell from 54 percent of GDP in 2001 to 38 percent in 2008.

Macroeconomic stability and market-friendly policies helped provide a durable growth impetus. As in much of Africa, growth in Kenya and Tanzania has been driven by strong domestic markets, led by a growing middle class. For both countries, an improved investment outlook contributed to a sustained expansion in private sector construction spending. At the same time, the adoption of new technologies has contributed to rapid growth in communications and finance. This engine of growth helped shield both economies from the global downturn, with spending on construction, communications, and finance continuing to grow at a 9 to 10 percent real rate throughout the Great Recession.

Strengthened macroeconomic buffers also provided space for a countercyclical policy response to the global downturn. With modest fiscal deficits and sustainable levels of public debt, both countries allowed government spending to rise between 2006/07 and 2008/09—by 4½ percentage points of GDP in Tanzania and by 2 percentage points in Kenya. This fiscal stimulus helped offset growth spillovers from a less favorable external environment. Monetary policy was also supportive. Tanzania halved its short-term interest rates between 2007 and 2009. And in Kenya, a recent IMF study shows that supportive monetary conditions were successful in offsetting most of the contractionary impact of the Great Recession, which would otherwise have resulted in output falling well below its potential (Figure 4.3.1, panel 2). Under floating exchange rate regimes, both currencies appreciated in real terms against the dollar through 2009, though this did not offset the overall impact of fiscal and monetary easing. Both countries saw quick, albeit temporary, deterioration in their overall balance of payments in 2008, but weathered it readily using their healthy gross reserve buffer (of about four months of imports) and by resorting to new IMF financing.

Diversification of production and export activity may also have helped their resilience. At the product level, Kenya has increased its exports of intermediate nonmanufactured goods while diversifying its tourism market. In Tanzania, a significant decline in traditional agricultural exports was offset by growth in exports of minerals and manufactured goods. At the market level, Kenya’s trade with other emerging market and developing economies has remained broadly stable at slightly more than half of total exports; in Tanzania, sales to these economies doubled to represent two-thirds of exports, helping the country decouple from the advanced economy growth cycle (Figure 4.3.1, panel 3).

Both countries are projected to sustain a robust pace of growth through 2012. The rate of expansion is likely to remain somewhat below the peak rates seen during 2006–07 given steps to gradually reverse the 2008–09 fiscal stimulus and because of the monetary tightening adopted since mid-2011 to  bring down food-price-related inflation. Credit growth has decelerated in both countries but remains sufficient to support steady growth. More generally, unlike in some other emerging market and developing economies, growth has been supported by direct investment and capital repatriation, which are less likely to experience sudden stops, and the financial sector remains robust, with low levels of nonperforming loans. The resilience of Kenya and Tanzania could be tested, however, in the event of an intensified downturn in the global economy. Sustained growth in exports has supported their external performance so far, but a new global downturn, including emerging market and developing economies, would bring new balance of payments pressures.

Both countries also have more constrained policy space than at the start of the Great Recession, with higher fiscal deficits and debt levels, higher inflation, and somewhat lower gross reserve cover. Accordingly, both countries are rebuilding macroeconomic buffers under programs supported by the IMF: Kenya’s economic program has been supported by a three-year Extended Credit Facility since 2011, and Tanzania recently accessed an 18-month precautionary Standby Credit Facility to complement its preexisting Policy Support Instrument arrangement.

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BandGap's picture

A Kenyan once said "you didn't build that!".

Dr Paul Krugman's picture

Although there are those of you here who are brilliant, and those who are merely misguided (our Tyler Durden), some of you are lost.

He showed his B.C.  Get over it.

malikai's picture

I want to see your birth certificate.

Prove you are human.

The Alarmist's picture

One must wonder what was going through the mind of a typical middle-class Roman as the hordes were streaming across the frontiers in the fourth and fifth centuries AD.  The first thought might have been to wonder about the wisdom of outsourcing good Roman jobs to cheaper imported labour.  The second thought might have gone to why Italia, having been plundered, was no longer as interesting as other parts of the Empire.

knukles's picture

Many of the plundering horde were welcomed with open arms by the then citizens of the republic (taxpaying serf laborers) on the diktat that it would be politically incorrect to discriminate against the smelly, funny looking, foreign tongued, strangers with odd disturbingly violent, religious convictions. 
Indeed as time wore on, the foreigners, later supplanted by the Nights Templar, established a banking system in Rome and throughout the badly politically fractured European lands.  In fact, the system was so effective a predecessor of branch, fractional reserve banking that a depositor in Paris or Venice for example, could deposit funds, receive a statement and withdraw the same somewhere such as Jerusalem when on business, especially when performing God's Work.
Interestingly, the banking system established by the Knights Templar being of a multinational jurisdictional nature was widely unregulated.  That having been said, in countries where there was some regulation over the banking system, it's importance had been recognized by the Crowns, the Papacy and their agents such that it was largely protected and left to it's own devices, operating largely unfettered.  Thus the formal establishment of Shadow Banking characterized by infinite re-hypothication.
As the influence of the bankers grew, many efforts were indeed outsourced to foreign nationals out of pure expediency.  To wit, it had become necessary for the Crowns and Papacy in order to keep the peasantry in thrall, to engage in a perpetual state of war with external enemies.  In this case, that role of external enemy was outsourced to a "bunch of filthy Arabs"; adherents to a foreign religion and military effort which was sold to the peasantry as an external existential threat to their very existence in response to which they willfully ponied up more treasure to Crown to remain "free" and Papacy in order to remain eligible to enter the gates of heaven as Faith Without Works was Dead.
Outsourcing and shadow banking, the funding of wars and propaganda efforts.

Nothing new.

Taint Boil's picture



Was that a fox news clip ........

SafelyGraze's picture

it's time to put this whole "birth certificate" canard to rest

please, people. it's all Right There.

what else do you need? the word "original" on it? "authentic"? 

Marco's picture

In the absence of any actual direct quotations I'm gonna go with Snopes and not waste my time watching those videos. Unless someone is willing to point out some transcripts or a time in the video where she admits they were fake and meant sarcastically ... I'm pretty sure snopes has it correct though and you are an idiot, naive or a troll.

To anyone with some ability for critical thought the fact that those articles almost exclusive contain explanations of what she said without showing what she actually said should ring alarm bells. The lack of direct quotations for the most important implications screams "I want plausible deniability to defend myself against slander by claiming I misunderstood".

Birthers ... ugh, you have such a strange concept of proof. Yeah it's a mangled piece of PDF, but between auto OCR, standard backgrounds and all kinds of other crap idiot IT departments can add it doesn't mean a fucking thing. The official record keeper went on record to say the information was in the paper records that was the point where you guys lost ... if he is part of the conspiracy then you will NEVER be able to prove otherwise. Because he could have falsified the paper records by now a million times over as well.

Leopold B. Scotch's picture

All that aside, you don't need a birth certificate to understand the guy has very little respect for LIBERTY. 

That alone disqualifies Obama.

But then again, that alone ALSO disqualifies Mittens.

Go Tribe's picture

You know, it's a lot easier than that. NO ONE in their right mind would think obama's an American.

jeff montanye's picture

he is so totally an american.  if you listened to him on radio rather than watched him on teevee, it would be hard to tell which party he was from.  on the most critical policy issues (financial, economic, military, constitutional) he is basically g w bush.  as dick cheney said:

its only when it gets into abortion and gays that the parties differ, a little (cheney is to the left of obama on gay rights).  the rest is "vibe".

Urban Redneck's picture

They needed to give W. an Al Jolson job to make his "medicine" more palatable to the masses.

nmewn's picture

Now if he would only show us all his college records, you know, to show us his brilliance.

And, of course, the financiers who paid his way.

The Alarmist's picture

There is ample evidence he played up his foreignness to gain advantage, so the question becomes one of "Has the statute of limitations run out?"

nmewn's picture

Its my opinion, he (like Fauxcahontas Warren in Massachusetts) is hiding something.

I think we have a right to know what it is.

LMAOLORI's picture




I wonder why obama voluntarily (cough, cough) let his law license go?  Fauxcahontas apparently didn't feel it was necessary to have one to practice law.

knukles's picture

Which is illegal, is it not?
Oh, never mind....

Taint Boil's picture



Illegal aliens have always been a problem in the USA ….

SafelyGraze's picture

no. not the law license again.

ok, here you go

can you people never be satisfied?

SafelyGraze's picture

"Now if he would only show us all his college records "


*that* settles *that*

knukles's picture


You sir are delusional and self destructive.
Your sole purpose on ZH is to provide a basis for ridicule and laughter.
Get a life.
Go have coffee with Maureen Dowd.

Dr Paul Krugman's picture

I find most of Zero Hedge stimulating - two thirds of the people anyway (the above mentioned groups) and two out of three ain't bad.

The forecasting is interesting and as I do agree that we are in recession - or maybe even depresssion - I find many of us are in agreement.

I understand we have different views on how to solve the problems, but isn't that what this place is for?  Tyler, care to weigh in?

nmewn's picture

Google up Khalid al Mansour-Percy Sutton-Harvard-Obama and tell me what you think.

Could be "stimulating" conversation...Paul ;-)

Dr Paul Krugman's picture

I googled it.

Care to cite a reliable source?

knukles's picture

Sorry Paul, but each must be evaluated on it's own merits; many here find the New York Times to be of abysmal relability.

killallthefiat's picture

GS and Asian investors are finally learning that Spain is not Uganda.

nmewn's picture

And your definition of reliable is what...NBC?

If you would have dug you would have discovered it was none other than Percy Sutton who is pointing to al-Mansour as Obama's benfactor at Harvard. Percy Sutton is an Obama man, he would have no reason to say it if it weren't true.

But here ya go...


"In a televised interview in 2008 on New York's all news cable channel, NY1

"The friend's name is Dr. Khalid al-Mansour, from Texas," Sutton said. "He is the principal adviser to one of the world's richest men. He told me about Obama."

Sutton recalled that al-Mansour said that "there is a young man that has applied to Harvard. I know that you have a few friends up there because you used to go up there to speak. Would you please write a letter in support of him?" Sutton did.


What are the chances the video from NY1 is gone?



Now...about that overseas money flowing to Obama (just like in 2008)...

"The report focuses on the website, which used to be owned by a major Obama donation bundler. Type that site in and you are directed to the Obama donation site. The report said that 68 percent of the traffic to comes from overseas."

From the report provided to Secrets:

-- Obama Campaign Lacks the Industry-Standard Level Of Credit Card Security For Donations, But Uses It For Merchandise Purchases: To purchase Obama campaign merchandise, the campaign requires buyers to enter their credit card CVV security code, but does not require the credit card security code to be entered when making an online campaign donation. By GAI's estimates, the Obama campaign's failure to utilize industry-standard protections potentially costs the campaign millions in extra processing fees.


Purchased By An Obama Bundler In Shanghai, China With Questionable Business Ties to State-Run Chinese

Enterprises: In 2008, was purchased by an Obama fundraiser living in Shanghai, China, whose business is heavily dependent on relationships with Chinese state-run television and other state-owned entities.


Oh yeah, the source...

Marco's picture

"What are the chances the video from NY1 is gone?"

Conspiracy theorists might say otherwise ... but google is actually pretty good at not censoring shit, so the chances are pretty slim.

PS. this unlike the whole birther shit is actually pretty interesting.

nmewn's picture

Excellent Marco, thank you.

A little digging goes a long way doesn't it? The next question would be why al-Mansour would desire to promote this young man called Obama? Knowing what Al-Mansour is or rather, who he is and what his agenda is. Knowing also the mentoring father figure of Frank Marshall Davis it becomes a little clearer now doesn't it?

Its a shame MSM "journalists" residing in the Fourth Estate were to inept to use Google in 2008 isn't it? ;-)

Marco's picture

The thing is it doesn't really change my opinion of Obomber ... the Saudi Arabian link is interesting in that it shows that the rich groom presidential candidates and that national boundaries mean nothing to them.

I don't see any deeper conspirational plans in it though. The US has always benefitted hugely from it's relation with SA to begin with, exchanging cheap oil for military protection. I'm sure they want connections with the white house just to keep tabs, but there is nothing they can really take from the US ... because the US has so little to give (other than soldiers).

As for communism let me just say LOL.

nmewn's picture

Not communism per se, black liberation theology.

A blend of Marx, Islam and Christianity with the central focus being a persons skin color.

Surely you're not denying Davis was a Marxist anymore the Van Jones is to this very day. Within that is the notion of Marx's class struggle and victimhood. It is the very thing Obama's pastor (Rev Wright) preached. That and re-distribution of wealth via the state which is once and always a boondoggle.

But these are things of the flesh are they not? Not the of wonder the lad appears and speaks to us like a clueless idiot without his teleprompter.

The Alarmist's picture

"Go have coffee with Maureen Dowd."

I remember having my first espresso in Portugal many years ago ... actually, I had four that day, and then went back to work and could not sit for the next four hours.  I wondered how the old Geepers had four of those suckers in a single lunch.  The answer, once proper observation was made, was that each espresso was accompanied with a brandy.  

Given enough brandy, coffee with Maureen Dowd is doable ... hell, sleeping with Maureen Dowd might also be doable.

bank guy in Brussels's picture

Karl Denninger ... who is self-proclaimed 'anti-conspiracy' (e.g., he still thinks a few Muslim guys going to a strip club blew up the NY Twin Towers)

Was quite surprised and shocked when he looked at that so-called Obama birth-certificate ... a laughable fake

He has printed up detailed analysis of why it is undeniably fake as have many others

Of course this is not on Bloomberg or Reuters

And it seems that it may be Obama's real father is not the Kenyan, but black American Communist Frank Marshall Davis ... a figure who had to be hidden given that Obama's mom and much of the rest of his family were working for CIA companies ... Obama's mom working for Timmy Geithner's dad, actually

The Communist dad was a no-no for the US oligarchs to get Obama into the White House, so ....

The American oligarchs like seeing how much criminal shite they can pull off in broad daylight

And the whole world falls for the shite because most sheeple believe what is on the CIA's Wikipedia or CNN


Ineverslice's picture


No he didn't....Get with it.

Doode's picture

Is this the real Krugman?

Ineverslice's picture


More than likely, it's worse...

someone aspiring to be him.

knukles's picture

Oh Jesus God, man.
That's low even by my standards.

Zero Govt's picture

aspiring to be Paul Krugman is worse than being Krugman?

i'm not sure about that

you've gotta be pretty low and desperate to accept a Nobel for Economics when you know nothing about economics