Treasury’s post COVID-19 economic recovery strategy

November 27, 2020 - Reading Time: 2 minutes - By The Vellum Team

The National Treasury and Planning State Department for Planning this week presented highlights of a Post-Covid 19 economic recovery strategy (ERS) including:

Macroeconomic Objectives of ERS

  1. Increasing diaspora remittances and investments from Kshs.280 billion 2020 to Kshs.500 billion per year; • Increasing private sector financing of infrastructure to at least 2 % of GDP annually; and
  2. Restructuring public debt to lengthen the maturity structure of domestic and reducing the share of commercial debts as well as refinancing it to obtain better pricing terms Key Pillars of ERS The key elements and focus of the ERS include:
  • Enhancing budgetary allocations to strengthen health care systems
  • Investment in ICT and digital infrastructure
  • Facilitating a green and resilient recovery and growth
  • Support to MSMEs
  • Full and timely implementation of the ESP
  • Enhancement of targeted social protection
  • Strengthening the national capacity for disaster risk management
  • Mainstreaming diaspora financial and intellectual resources
  • Enhanced budgetary support to police and security related services to enforce compliance to Covid-19 containment rules and regulations
  • Strengthening governance and economic management
  • Expediting the implementation of policy, legal and institutional reforms

Key Policy and Legal Measures to Support Economic Recovery To facilitate successful implementation of the ERS the Government will:

  • Roll out the implementation of the MSME Credit Guarantee Scheme to support MSME businesses and enterprises;
  • Expedite amendment of the investment guidelines under the Insurance Act to allow insurance companies to invest up to 10 percent of their assets in debt instruments and affordable housing projects;
  • Enact legislation on Road Toll fees to facilitate private sector investment in construction and maintenance of roads and highways;
  • Expedite amendments to the Retirement Benefits Act to allow scheme members to use 60 percent of their benefits to purchase a house under the affordable housing program;
  • Expedite amendment of the PPP Act (Amendment) Bill 2017 to remove unnecessary approvals and redundant processes; • Fully operationalize the SEZ Act 2015 to attract domestic and foreign investment in Special Economic Zones;
  • Enact Business Laws (Amendments) Act 2020 to improve ease of doing business; and
  • Expedite implementation of the Public Service Superannuation Scheme, County Government Retirement Scheme and National Micro Pension Scheme to facilitate increase in domestic saving and investment.

Way Forward in Finalization of ERS

The Draft ERS to be circulated to Council of Governors, Development Partners and private sector for validation given their role in the implementation.

Official launch is expected to be mid- December, 2020

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