mburu jeff 
International Monetary Fund(IMF) said that Kenya is set to outgrow Ethiopia’s economy and be the largest economy in East Africa this year.
This follows the recent devaluation of the Ethiopian currency on July,2024 as part of the measures taken to stabilize the economy and advance long-drawn debt restructure talks.
IMF estimates Kenya’s gross domestic product (GDP) to expand to $132 billion by the year 2025, up from the forecast $117 billion in Ethiopia.
EFFORTS of ETHIOPIA in opening up the exchange rate and allowing the weakly birr appreciated by more than 55% improved access to a package of IMF help amounting to $3.4 billion along with additional $16.6 billion financial help in assistance by the World Bank.
The devaluation also gave leeway to the initiation of talks with overseas creditors on foreign-held debt restructuring of at least half of the country’s $28.9 billion foreign-held debt, said Bloomberg.
While the economic assistance provides the debt-stricken Ethiopian economy with breathing space, the sharp depreciation also increased the prices of imported products, adding pressures on inflation in a country already economically strained by warring and weather-related issues.
Meanwhile, Kenya has been able to sustain relative macroeconomic stability despite its own fiscal woes.
Its diversified economy, strong financial sector, and relatively stable exchange rate have enabled it to pull ahead in the race to dominate East Africa economically.
The Kenyan shilling strengthened by about 21% in the past year, making it the world’s best-performing currency in 2024.
