Short Term Effects of the Kenyan Crisis

Short Term Effects of the Kenyan Crisis

Background n n n Crisis started after elections (Dec. 27 th) Kenya is the main export and import route for Rwanda Limited data is currently available as end. January 2008 official data has not been published yet.

International Trade n Tea (Exports) Disruptions due to fuel rationing and higher fuel costs n Initially delays of transport (Maraba-Mombasa) now ongoing under escort. n n Coffee (Exports) Crisis occurred at the end of the coffee season n Most coffee now exported through TZ (less efficient and more expensive port). n Could affect banking sector if crisis persists n

International Trade n Imports No significant change in aggregates n Safe passage ensured BUT n Long delays in delivery esp. in key raw materials which could affect production if existing stocks deplete n Food security not affected significantly as food imports come mainly from Ug and TZ not Kenya n

Oil Industry n Largest Economic effect so far n Go. R sold over 1. 5 mio liters to oil dealers There was need to ration and address speculation n Alternative route negotiated by Go. R (from KE to TZ) n Transport conditions are poor n Transport and fuel cost is higher → Pump price increased by 7% for super and 6% for diesel → Subsidies of fuel from TZ is temporarily higher n n Tax revenue actuals will be affected + inflationary effects needs to be monitored

Areas not affected so far n Tourism (only 25 people rescheduled) n Exchange rate and interest rate n No sign of shortage of consumer goods on Rwandan markets yet

Additional considerations n n There will be several budget implications for 2008 to be analyzed next month with the IMF (restocking oil reserves, cost of developing new route through TZ, etc. ). A report shall be published end – March with Quantitative data