Kenya's current account deficit for the first quarter of the year narrowed to the lowest level in seven years on increased services receipts and a flat import bill.
A current account deficit indicates that a country is importing more than it is exporting.
The balance of payments report for the quarter to March released by the Kenya National Bureau of Statistics shows that the country’s current account deficit narrowed to Sh84.9 billion from the Sh139.3 billion recorded in the same period last year.
The balance of payments is the record of all economic transactions which have taken place within a given period. It has five main components, with the current account being the biggest.
The current account, which represents the balance of trade on goods and services, remained on the deficit side given the country is a net importer with a merchandise trade deficit of Sh303.6 billion in the three months.
Fast-growing receipts from travel accounts combined with faster growth in export earnings cut the deficit to the lowest over the period since 2016 when it stood at Sh43.4 billion.
“During the first quarter, export earnings recorded a faster growth on better tea, iron, steel and titanium revenue compared to a slower growth in total import expenditure,” said KNBS in the report.
Over the period, services account recorded a 13.6 percent growth to Sh56 billion in travel receipts as a result of tourism and other services that expanded to Sh40.3 billion.
The total trade deficit narrowed by Sh27.7 billion as exports grew by Sh24.8 billion to a record Sh232.6 billion as Uganda remained the single biggest market for Kenyan goods.
Uganda imported goods valued at Sh31.2 billion followed by the Netherlands at Sh17.9 billion and the US at Sh15.1 billion.
Expenditure on imports shrank by Sh2.9 billion to Sh357.1 billion, even as the local currency shed seven percent against the US dollar which made imports more expensive.
The overall balance in the period was recorded at Sh127.8 billion as the capital and financial accounts both posted a surplus of Sh6.9 billion and Sh111 billion respectively.
