By Our Correspondent

Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Thursday advised Kenyan Authorities to demutualise the Nairobi Stock Exchange (NSE) to help deepen the Country’s Financial Sector.

The advice came on the heels of the fifth review under the three-year Extended Credit Facility (ECF) arrangement approved for Kenya by the IMF following a visit by the mission led by Domenico Fanizza.

According to the IMF, Financial sector stability should be enhanced by new prudential regulations and consolidated supervision of regional banking groups.

The IMF affirmed that deepening of the financial sector should be supported by the demutualisation of the Nairobi Stock Exchange, as well making concerted efforts towards the setting up of a Real Estate Investment Trust and establishing a Futures and a Commodities Exchange.

Kenya is expected to get a loan of about US$110 million, which would bring total disbursements under the arrangement to SDR416.60 million (about US$640 million) under the fifth program review of the ECF arrangement tentatively scheduled for consideration by the IMF Executive Board in April 2013.

The IMF Executive Board had originally approved Kenya’s three-year ECF arrangement in January 2011 in an amount equivalent to SDR325.68 million (about US$500 million), and in December 2011 approved an increase in access to an amount equivalent to SDR 488.52 million (about US$750 million.

Fanizza who led the IMF mission to Kenya had earlier said that Kenya has stayed the course in its economic reforms; despite the ongoing electoral campaign, the still difficult global conditions, and the high cost of security operations in Somalia, “fiscal discipline has been maintained, monetary policy has remained cautious, and structural reforms have progressed” he said.

He affirmed that the results have been favourable, Inflationary pressures have been tamed. Economic growth has kept a good pace, notwithstanding the slowdown of exports to and tourism from Europe.

“International reserves are on the rise, and the current account position has significantly improved if Kenya could exclude capital imports that have surged notably because of oil exploration” he said.

Fanizza further affirmed that Financial inclusion in the country is moving fast, providing the opportunity to reach millions of people who until recently did not have access to financial services.

He also said Interest rates have started to decline, providing support to economic activity and rising foreign investment has sustained the strong performance of the Stock Market.

“These results are encouraging, but much remains to be done. Policies need to continue to reduce Kenya’s vulnerabilities in a context of heightened domestic electoral uncertainty and a weak global economic outlook. Therefore, discussions focused on further strengthening the foundations for sustained, higher, and more inclusive growth to improve the living conditions for all Kenyans” Fanizza said.