Kenya’s current account deficit widened to 5.4 per cent of Gross domestic product (GDP) in the 12 months to June from 5.2 per cent, primarily on account of a higher trade deficit.
The Central Bank of Kenya disclosed that this was highly driven by a higher import bill due to rising oil prices and the continuing recovery of the economy.
“The higher deficit was attributed to lower service receipts, which more than offset the increased receipts from exports and remittances,” the Central bank said.
“It is at 5.4 per cent in June and we expect that will remain at 5.2 per cent for the year.
“There have been significant transactions on the capital accounts side as well with the flows received (from external loans) at the end of June,” said CBK Governor Dr Patrick Njoroge post MPC briefing with media.
Foreign currency reserves held at the Central Bank fell to $9.341 billion as of July 29 down from $9.371 billion as of July 22 2021.
“Moreover, improved export growth, anchored on healthy demand for local agricultural produce, robust diaspora remittances and a return of international travel should help tame the current account deficit to 5.20% of GDP in 2021 from an estimated 5.40% in the 12-months to June 2021,” Stephanie Kimani, NCBA Market Research said in a commentary.