Kenya’s current account deficit (CAD) as a percentage of Gross Domestic Product (GDP) narrowed to 5.1 per cent in July from 5.2 per cent a year earlier, according to provisional data from the Central Bank of Kenya (CBK) on the balance of payments.
“The narrower deficit reflects improved receipts from service exports and remittances,” the CBK noted.
A Current account deficit implies the country is importing more goods and services in value than the exports.
The CBK estimates a wider current account deficit at the end of the 2022 calendar year at an equivalent 5.9 per cent of GDP on account of higher international oil prices.
According to NCBA Economic Monthly Report for September, the sovereign is rationalizing and prioritizing its spending with the aim of narrowing the fiscal deficit to 5.90% of GDP in the FY2022/23 from 7.80% in the previous cycle.
“This explains the progressive withdrawal of the said fiscal stimulus measures. To plug the revenue deficits, the sovereign has enhanced its appetite for local financing as external credit conditions tighten. To be sure, Eurobond yields have risen by an average 682bps since the start of 2022. Comparably, the local yields have risen by an average 95bps over the same period.”