Current account deficit falls, exports, remittances up


Central Bank of Kenya (CBK) Governor Patrick Njoroge on October 27, 2022. PHOTO | DIANA NGILA | NMG

Kenya’s current account deficit to GDP for 2022 has come in nearly a percentage point lower than earlier projected by the Central Bank of Kenya (CBK) following a better than expected performance of export earnings and higher diaspora inflows in the last quarter of the year.

The CBK said last week that the deficit, which measures the difference between a country’s forex inflows and outflows, was estimated at 4.9 percent at the end of December 2022.

As late as November, the monetary regulator was projecting the deficit at 5.6 percent.

The current account deficit stood at 5.4 percent in 2021, having gone up from 4.6 percent in 2020.

“This turnaround in the current account (projection) relates to some of the exports that we saw towards the end of the year, and is a good outcome. Our sweet spot in the current account is a deficit of about five percent and we expect that it will remain around there at 5.4 percent in 2023,” said CBK governor Patrick Njoroge in a briefing last week.

“This also means that the foreign exchange market will have greater stability.”

New data from the CBK shows that tea export earnings and diaspora inflows provided the strongest support to the country’s foreign exchange account, compensating for a decline in horticulture export earnings last year.

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