By Ronald Owili
PineBridge Investments projects that the economy will this year grow at 5.2 percent. The firm says the economy would have grown at a higher rate but an increase in interest rates and depreciation of the local currency towards the fourth quarter of 2015 would slow it.
The firm says despite a reprieve in dropping fuel prices which will mitigate an increase in the rate of inflation, consumers should brace for tax hikes as the government faces budgetary constraints due to lower fuel prices.
Last week, ERC revised down the retail price of fuel citing reduced cost of imported refined petroleum products and with Iran back in the oil business, the prices are to decline further in coming months.
To consumers this signals cheaper fuel, to the country, a reduction in import bill instead easing pressure on the shilling.
Overall investments in infrastructure, and agriculture, ICT and financial sector are to be drivers as government looks to keep inflation with the medium term range of 7.5%.
On the other hand, budgetary constraints to fund infrastructure projects to persist bringing constraints which will push debt burden to 55.9% from 56.2% as another external bond unlikely.
EAC will record a growth of above 5% according to the firm with TZ 7.2%, UG 5% & RW 7.6% as election beckons in UG, Zanzibar and Kenya next year. For consumers the firm predicts that the government will levy additional taxes in 2016.