Keep in mind the fact that the investment-GDP ratio includes public investment, while the fiscal deficit largely comprises a revenue deficit, i.e., what the government borrows in order to meet its operating (as opposed to capital) expenditure. Cutting consumption, while raising investment is a textbook formula for accelerating growth. Its validity was amply demonstrated in the Indian high-growth period of 2003–08.
In addition, the Central Bank’s foreign exchange reserves coupled with a precautionary facility from the IMF are adequate to stem volatility. The Central Bank will continue to monitor developments in the foreign exchange market but allow genuine demand and supply factors to determine the level of the Kenya Shilling exchange rate.