Infrastructure To Stimulate Kenya `09 Growth

The debut sovereign paper was meant to help plug a 127 billion budget deficit for the current fiscal year.

Kenya's economy will be stimulated by infrastructure development this year and should expand by at least 4-4.5 percent, the east African country's finance minister said on Monday.

East Africa's biggest economy grew by an estimated 2-2.5 percent in 2008 -- the lowest rate since 2003 if confirmed -- mainly due to the disruptions caused by political violence earlier that year.

"We are hoping at least to be able to achieve 4-4.5 percent growth. That is what we hope," Finance Minister Uhuru Kenyatta, told a news conference. "Infrastructure development will be the key driver which will stimulate growth."

Kenya issued an 18.5 billion shillings ($232 million) debut infrastructure bond last month and the proceeds will be used on the construction of roads, dams, geothermal wells and other projects that are expected to boost the economy.

Kenyatta said the government would lean on domestic borrowing more heavily after it delayed the issue of a 33.6 billion shilling Eurobond due to the global crisis.

"We are looking to curtail some of our recurrent expenditure and redirect parts to food, but largely, as a country, we need to start having dependency on domestic mobilisation of resources. It is something we all have to face," he said.

The debut sovereign paper was meant to help plug a 127 billion budget deficit for the current fiscal year.