Economic Survey 1980

The balance of payments has continued to be the major problem area in 1980. The import prepayment scheme was relaxed substantially late in 1979 and this factor could lead to a higher volume of imports in 1980. The cost of such imports will in any event rise substantially because of the oil price rises already announced and because of inflation in the countries supplying Kenya's imports. The continuing closure of its border by Tanzania and the uneasy political situation in Uganda seem likely to prevent any major increase in exports to African countries. However, export earnings will rise because of an anticipated increase in exports of coffee and because the price rises for the petroleum imported into Kenya to be processed for export must be passed on to the consuming countries. Some benefit should also accrue from the high sugar prices on world markets at a time when Kenya may be producing more sugar than is required for domestic consumption. All the same it will not be possible to balance external payments unless accumulated reserves are drawn down and Kenya borrows externally.