NAIROBI, Nov. 21 (Xinhua) -- The International Monetary Fund (IMF) on Tuesday urged Kenya to take urgent measures to reduce its level of public debt which is estimated at 57 percent of the Gross Domestic product (GDP).
Jan Mikkelsen, IMF Kenya Resident Representative, told a forum in Nairobi, that rising debt levels will put pressure on the public budget, the banking system and make lenders reluctant to extend additional loans.
"We are recommending that Kenya puts in place mechanisms to ensure that its public debt levels do not reach unsustainable levels," Mikkelsen said during a forum on the Economic Outlook for Sub-Saharan Africa.
He noted that the country's economy is not growing fast enough to easily generate revenues to finance debt repayments.
Mikkelsen noted that low public debt also ensures lower debt service cost levels, which frees up resources for critical government services.
He added that one way to contain rising debt levels is to reduce the level of spending or raise the revenues. According to the lender, Kenya has potential to raise an additional three percent of GDP in revenues.
Mikkelsen said that Kenya experienced an average growth rate of approximately five percent for the first half of 2017.
"However, in the second half of 2017, economic output has been affected by the extended electioneering period caused by nullification of the Aug. 8 presidential polls," he noted.
The IMF official added that despite the uncertainly about the election and the slowdown in economic activity in recent months, the economy remains remarkably resilient, as demonstrated by relative stability in financial markets.
He noted that going forward, the economic growth outlook is positive provided there is political stability.