CBK Announces the Present Account Deficit to End year at 5.2%

The Central Bank of Kenya (CBK)  has maintained that the current account deficit will be 5.2 percent in the end-year contrary to the upsurge of imports that has pushed it higher in the past two months relative to the beginning of this year.

According to CBK, the current account, measures inflows, and outflows of hard currency widened to 5.4 percent of the gross domestic product in the 12 months to June compared to 4.8 percent at the end of last year.

This results from higher import bills due to rising oil prices and the continuing recovery of the economy that has raised consumer spending and industrial imports.

CBK has explained that exports and diaspora inflows have  gone up, although at a slower pace compared to imports.

CBK governor Patrick Njoroge last week stated that the continuing struggles of the tourism sector have weighed against a lower current account deficit, with arrivals lower by more than 70 percent compared to the pre-pandemic period

“It is at 5.4 percent in June and we expect that will remain at 5.2 percent 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,” the governor said.

“In the first half of the year, Kenya’s imports went up by 21.9 percent compared to  2020 same time, mainly reflecting increases in imports of oil and other intermediate goods. Exports grew by 11.1 percent in the period, backed by higher earnings from horticulture and manufactured goods, which rose by 29.4 percent and 45.2 percent respectively.”

The CBK affirmed that receipts from tea exports fell by 5.5 percent majorly attributed to the impact of accelerated purchases in 2020 when buyers were stocking up in fear of supply chain disruptions due to the Covid-19 outbreak.

Remittances rose by 20.4 percent in the first half of 2021 to 1.75 billion (Sh190.1 billion), and are expected to remain robust for the rest of the year.

Account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports. The current account includes net income like interest and dividends or transfers like foreign aid.

By Philly Opere.