The Central Bank of Kenya (CBK) has warned that the current drought ravaging the east African nation could slow the economic performance this year.

The CBK said in its just published monthly economic report received here Monday that sustained economic growth is at risk of losing the momentum due to the ongoing drought that is hitting the northern and eastern parts of Kenya.

"Sustained economic recovery, however, stands the risk of losing momentum due to ongoing drought particularly if the March- May 2006 long rains fail to occur as expected," the central bank said.

According to the report, Kenya's economy grew by an estimated five percent in 2005 compared with 4.3 percent in the previous year.

"Growth in real GDP in 2005 is estimated at five percent," the central bank said in its latest monthly economic review.

The bank attributed last year's growth to good weather, strong growth in tourism, and privatization in the transport and power sectors.

It said the economy had registered growth of 5 percent in the first 10 months of 2005 and expected it to keep on an upward trend.

It also said the drought, which has left 2.5 million Kenyans facing the risk of starvation, also threatened inflation.

Inflation rates rose by 1.6 percent last month, reaching 7.6 percent as the cost of essential commodities continued to go up, also blamed on the current drought ravaging the nation.

Kenya's Bureau of Statistics said last week that the month-on- month underlying inflation also rose marginally from 5.8 percent to 6 percent.

Kenyan Finance Minister David Mwiraria disclosed last week that he expects the economy to grow by 6 percent this year.

Mwiraria attributed his figure to increased success of the tourism sector coupled with successful privatizations.

The Kenyan government says about 2.5 million people will require assistance in 2006, a dramatic increase from the previous 1.1 million people being assisted by aid agencies and will require an extra 236,000 metric tons of food valued at 140 million US dollars.

About 40 people have died from malnutrition or associated illness and President Mwai Kibaki has declared the drought a national disaster.

Hundreds of thousands of livestock have also perished from hunger and thirst, imposing further hardship on the livestock dependent pastoralist populations of the region.

Wildlife officials have also warned of the danger from rogue animals wandering out of nature reserves looking for water as drought grips the land.

The World Food Program (WFP) on last Friday warned of looming humanitarian catastrophe and appealed to donors for emergency aid for more than five million people in east Africa.

Source: Xinhua