KENYAN ECONOMY FACES PROBLEMS, PRESIDENT SAYS The Kenyan economy is heading for difficult times after a boom last year, and the country must tighten its belt to prevent the balance of payments swinging too far into deficit, President Daniel Arap Moi said. In a speech at the state opening of parliament, Moi said high coffee prices and cheap oil in 1986 led to economic growth of five pct, compared with 4.1 pct in 1985. The same factors produced a two billion shilling balance of payments surplus and inflation fell to 5.6 pct from 10.7 pct in 1985, he added. "But both these factors are no longer in our favour ... As a result, we cannot expect an increase in foreign exchange reserves during the year," he said. The price of coffee, Kenya's main source of foreign exchange, fell in London today to about 94 cents a pound from a peak of 2.14 dlrs in January 1986. Crude oil, which early last year slipped below 10 dlrs a barrel, has since crept back to over 18 dlrs. Moi said the price changes, coupled with a general decline in the flow of capital from the rest of the world, made it more difficult to finance the government's budget deficit. Kenya was already spending over 27 pct of its budget on servicing its debts and last year it was a net exporter of capital for the first time in its history, he added. "This is a clear indication that we are entering a difficult phase as regards our external debts, and it is imperative that we raise the rate of domestic savings and rely less on foreign sources to finance our development," he said. "It will be necessary to maintain strict discipline on expenditure ... And members of this house will have to take the lead in encouraging wananchi (ordinary people) to be more frugal in satisfying immediate needs," the president added.