Kenya’s current account deficit widened to 5.4 per cent of gross domestic product in 2021 above the year’s projection by the central bank.
The central bank had projected 5.2 per cent of gross domestic product for the year.
In 2020, the deficit was recorded at 4.6 per cent of GDP.
“This reflects a higher import bill, particularly oil, which more than offset increased receipts from agricultural and services exports, and remittances,” the bank said Friday in its weekly bulletin.
“It is important to its true what we had projected 5.2 per cent. So why the difference, well it’s 0.2 per cent of GDP” said CBK governor Patrick Njoroge in a post-monetary policy committee (MPC) briefing.
“The sweet spot for the current account (deficit) is five per cent. This portends to stability and a well-behaved forex market going forward.”
Kenya relies heavily on imports of petroleum products to meet its energy demands.
In 2021, crude oil prices increased as global crude oil demand outpaced supply. For instance, the resurgence of Covid infections from the omicron variant thawed the rally, pushing oil back to about $ 78 at the end of 2021.
“For now, the oil producers remain non-committal on enhancing production in order to reduce prices. High-energy prices may remain a drag to the recovery, especially in non-commodity dependent developing economies,” NCBA Research said in its Monthly Economic Report January 2022.
According to provisional data from the CBK data, the country’s exports recovered to post an 11.7 per cent growth in the year to Ksh.765.2 billion ($6.739 billion).
Oil imports jumped by 50 per cent in the calendar year to Ksh 222.6 billion ($1.96 billion) attributable to the recovery in global oil prices following the reopening of global economies to commerce after easing of widespread restrictions.
The current account deficit is projected to remain stable at 5.2 per cent of GDP in 2022.
