Kenya’s current account deficit for the 12 months period to February narrowed by 20 basis points compared to a year earlier, due to lower import costs and resilient remittances.
Data from the Central Bank of Kenya (CBK) shows the current account deficit as a percentage of gross domestic product (GDP) was recorded at 4.6 percent in February, from 4.8 percent recorded in February 2020.
The deficit also stood at 4.8 per cent at the end of 2020.
The current account measures the balance between the country’s foreign exchange inflows and outflows — registering as a deficit when outflows exceed inflows.
Inflows come in the form of export earnings, diaspora remittances and investment inflows, while import costs and government’s external payments constitute the bulk of outflows.
CBK has attributed the decline to lower import costs despite the increased fuel prices over the period, and resilience in exports and remittances.
“Provisional data on balance of payments shows that the current account deficit narrowed to 4.6 per cent of GDP in the 12 months to February 2021 compared to 4.8 per cent of GDP in the 12 months to February 2020,” CBK stated in its weekly markets bulletin.
“This reflected lower imports of oil, machinery and transport equipment as well as improvement in tea and horticultural exports, and remittance receipts.”
The cumulative diaspora inflows in the 12 months to February 2021 totalled $3.15 billion (Sh346.26 billion) compared to $2.83 billion (Sh310.70 billion) in the same period to February 2020, a 11.4 percent increase.
Machinery, capital equipment, fuel and lubricants, and transport equipment account for the largest value of total imports value.
