, substantially raised
export capacity. In 2006 Kazakhstan completed the Atasu-Alashankou
portion of an oil pipeline to China that is planned in future
construction to extend from the country's Caspian coast eastward to
the Chinese border. The country has embarked upon an industrial
policy designed to diversify the economy away from overdependence on
the oil sector by developing its manufacturing potential. The policy
aims to reduce the influence of foreign investment and foreign
personnel. The government has engaged in several disputes with
foreign oil companies over the terms of production agreements;
tensions continue. Upward pressure on the local currency continued
in 2007 due to massive oil-related foreign-exchange inflows. Aided
by strong growth and foreign exchange earnings, Kazakhstan aspires
to become a regional financial center and has created a banking
system comparable to those in Central Europe.

Kenya
The regional hub for trade and finance in East Africa, Kenya
has been hampered by corruption and by reliance upon several primary
goods whose prices have remained low. In 1997, the IMF suspended
Kenya's Enhanced Structural Adjustment Program due to the
government's failure to maintain reforms and curb corruption. A
severe drought from 1999 to 2000 compounded Kenya's problems,
causing water and energy rationing and reducing agricultural output.
As a result, GDP contracted by 0.2% in 2000. The IMF, which had
resumed loans in 2000 to help Kenya through the drought, again
halted lending in 2001 when the government failed to institute
several anticorruption measures. Despite the return of strong rains
in 2001, weak commodity prices, endemic corruption, and low
investment limited Kenya's economic growth to 1.2%. Growth lagged at
1.1% in 2002 because of erratic rains, low investor confidence,
meager donor support, and political infighting up to the elections.
In the key December 2002 elections, Daniel Arap MOI's 24-year-old
reign ended, and a new opposition government took on the formidable
economic problems facing the nation. After some early progress in
rooting out corruption and encouraging donor support, the KIBAKI
government was rocked by high-level graft scandals in 2005 and 2006.
In 2006 the World Bank and IMF delayed loans pending action by the
government on corruption. The international financial institutions
and donors have since r