By Helen Nyambura-Mwaura and Andrew Cawthorne
NAIROBI (Reuters) - Kenya's economy is back on track aftera post-election crisis, with annual growth set to reach 10percent by 2012 and a debut $514 million (264 million pounds)international bond issue due this financial year, thegovernment said on Thursday.
"I believe that we can recover," Finance Minister AmosKimunya told parliament, reading his 2008-09 budget a fewmonths after Kenya's violent dispute over a Decemberpresidential poll.
"We have peace and stability and the recentover-subscription of the Safaricom IPO attests to the fact thatinvestor confidence, both domestic and foreign, has rebounded,"he said.
The mobile firm's IPO was over-subscribed by 532 percent,and shares rose 50 percent on the first day of trading thisweek in what analysts saw as a major vote of confidence inKenya.
Reading Kenya's annual budget to parliament, Kimunyapredicted east Africa's largest economy would grow 7-8 percentin 2009 and 10 percent in 2012.
He said a long-awaited bond issue, delayed due to thecrisis, would be launched in the 2008-09 financial year, to atotal value of 52 billion shillings (415 million pounds).
It would mainly finance roads and other infrastructure.
Kimunya said the international portion of the issue, worth33 billion shillings (264 million pounds), would take place inline with an anticipated improvement in ratings frominternational agencies as the economy got back on its feet.
"We are now gearing up for this year's ratings from the twoagencies and our plan is to launch the bond at an appropriatetime in the course of the new financial year. Such externalborrowing will ease pressure on the domestic market and help usmaintain low and stable interest rates."
The rest will come from domestic issues, he added.
Kimunya said that after five years of healthy growth, twomonths of violence after President Mwai Kibaki's disputedre-election in a December 27 vote had broken that progress.
The violence killed at least 1,300 people, displaced morethan 300,000 and paralysed key sectors of the economy liketourism, agriculture and transport.
"THREAT OF DISINTEGRATION"
Growth of 7 percent last year is expected to dip to as lowas 4.5 percent this year, according to officials.
"As we were preparing for the takeoff stage ... our nationcame under serious threat of disintegration," Kimunya said.
But the formation of a coalition between Kibaki andopposition leader Raila Odinga, who is now Kenya's primeminister, saved the day, he said.
"The signing of the peace accord ... ushered in a new andmuch-anticipated dawn for peace and stability."
Global investors increasingly view sub-Saharan Africa as anattractive last emerging markets frontier, with South Africaand Nigeria dominating interest.
Kenya, the traditional economic hub for east Africa, isalso seen as a hot-spot -- even despite the recent crisis.
Kimunya promised the government would do "all in its power"to combat inflation in Kenya, running at 31.5 percentyear-on-year in May, the highest for more than a decade.
He said healthy growth prospects for the whole Africanregion should help offset the grim global panorama of risingfood and fuel prices. The strength of Kenya's shilling,currently at 64 to the dollar, had also helped mitigate theeffect of fuel price rises, he said.
Kimunya said the government aspired to make Kenya amiddle-income nation by 2030, he added.
In a budget of 759.8 billion shillings, Kimunya forecast512.8 billion shillings of revenues, equivalent to 21.4 percentof Gross Domestic Product, and up from 448.8 billion last year.
He also said the budget deficit would reach 127 billionshillings, or 5.3 percent of GDP, versus 109.8 billion theprevious year. And privatisation revenues would fall from 36.1billion shillings to 8.0 billion in the year, he added.
- Additional reporting by Wangui Kanina, Duncan Miriri
(For full Reuters Africa coverage and to have your say onthe top issues, visit: http://africa.reuters.com/ )
(Writing by Andrew Cawthorne; Editing by Ian Jones)
