Kenya’s current account deficit narrowed to 5.1 per cent in the 12 months to July from 5.3 per cent in May, attributed to lower oil import costs coupled with improved inflows from tourism and diaspora remittances.
The deficit has tended upwards in recent months due to an elevated import bill, however, the fall in the price of Murban Crude from $118 per barrel at the beginning of July to $105 at the end of the month helped ease the pressure on the country’s forex.
Central Bank of Kenya (CBK) data shows that diaspora remittances so far this year are 13 per cent higher compared to last year, boosting the current account.
“The narrower deficit reflects improved receipts from service exports and remittances,” said the CBK in its weekly markets bulletin.
Cumulative diaspora remittances in the first seven months of this year stood at $2.36 billion (Sh284.5 billion), up from $2.09 billion (Sh251 billion) in a similar period last year, this despite month-on-month inflows falling since March this year.
Kenya’s trade deficit for the first six months of the year widened by nearly a quarter, hitting Sh814.02 billion from Sh620.82 billion in the corresponding period in 2021.
Global shipping prices and the cost of goods have also gone up, adding to the total cost of bringing imports into the country.
The Russia-Ukraine war has been the primary factor behind the rise in crude and food prices, with the two countries being major grain exporters and Russia the world’s third-largest oil producer.
Read also; CBK Predicts Increase in Current Account Deficit to 5.9%.
