Among the most important factors in explaining Singapore's rapid development is the ongoing policy commitment to macroeconomic stability. The pursuit of cautious financial policies has underpinned investor confidence, facilitating sizable inflows of foreign direct investment.

In Singapore, the formulation of fiscal policy is generally guided by long-term considerations, although on occasion the cyclical position of the economy has prompted adjustment of tax rates or expenditure levels in annual budgets. The stated long-term objective of the authorities is to achieve structural balance in the primary operating budget, compared with surpluses that in recent years have averaged over 5 percent of GDP. Expenditure and tax levels in Singapore are moderate in comparison with both industrial countries and those at a similar stage of development.

1. Using the case above for Singapore explain how policy commitment and other related factors can help realize macroeconomic stability in Kenya (10 marks)
2. Discuss how the Kenyan Expenditure and tax system should be designed in order to realize economic growth and development (10 marks)

QUESTION TWO

Capital markets play a vital role in an economy asone of the most powerful drivers of economic growth and wealth creation. Capital markets match borrowers with savers and their respective risk appetites for financial instruments, with an aim to produce a profitable investment opportunity for both parties.

1. Discuss the extend to which Kenya has been able to exploit the benefits of the capital markets. ( 5 marks)
2. Explain what can be done to realize the benefits of the capital markets in Kenya

( 5 marks)

Answer rating: 100% (QA)

1 Policy Commitment and Macroeconomic Stability in Kenya Fiscal Discipline Kenya can emulate Singapores commitment to fiscal discipline by ensuring th... View the full answer