Kenya’s current account deficit widened to 5.4 per cent of gross domestic product in the 12 months to May 2022, compared to 5.0 per cent in the same period, owing to a higher import bill.
The Central Bank of Kenya said that the wider deficit is attributed to a higher import bill, particularly for oil, which offset the increased receipts from agricultural services exports and remittances.
In addition, the country’s public debt has increased at a 10-year CAGR of 19.8 per cent to Kshs 8.5 trillion in April 2022, from Kshs 1.4 trillion in April 2011.
Analysts from Cytonn Investments note that the average GDP growth over the same period has been 3.9 per cent, an indicator that the increase in debt is not translating into GDP growth.
“A widening current account deficit, amid a fuel-linked increase in the import bill, has elevated the local demand for US dollars and as such sustained the Kenya shilling’s depreciation by an average 4.56 per cent this year,” said NCBA in a weekly fixed income note.
Kenya’s main agricultural exports include tea, coffee, cut flowers, and horticultural products.
According to data from CBK, in 2021, Kenya’s real GDP was Ksh 9.39 trillion.
Data shows that the bank said that usable foreign exchange reserves are projected at around $8.0 billion in July, enough to cover 4.6 months of imports, compared to $8.0 billion in June, or 4.7 months of imports.
According to the Kenya National Bureau of Statistics (KNBS) Q1’2022 Quarterly GDP Report, the economy recorded a 6.8 percent expansion in Q1’2022, up from the 2.7% growth in Q1’2021.
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