Kenya's current account deficit is expected to shrink faster than forecast to about 6.2 per cent of gross domestic product in 2016, helped by rising agricultural exports and falling fuel import costs, the central bank governor said.
Earlier forecasts had indicated the current account deficit would be eight per cent in 2016.
The current deficit "will probably fall by maybe 0.3 per cent" from the 6.5 per cent of gross domestic product at the end of 2015, taking it as low as 6.2 per cent, governor Patrick Njoroge told Reuters. More assessments were going on.
"That is a very rough number," he said, speaking in an interview late on Thursday on the sidelines of the World Economic Forum on Africa in the Rwandan capital Kigali.
The deficit had fallen on the back of improving tea and horticulture exports, two of Kenya's main revenue earners, as well as rising remittances from Kenyans living abroad.
"The price of oil has fallen dramatically and that will provide some relief," he added.
Kenya's currency has strengthened more than one per cent against the dollar this year and foreign reserves have risen steadily, reaching $7.7 billion in May or more than five months import cover, compared with less than four months last October.
"We do have enough reserves," he said, adding that a stand-by facility with the International Monetary Fund offered further insurance. "We have taken out insurance, we will use it in case of a shock. We have enough elbow room."
Meanwhile Treasury CS Henry Rotich has maintained that the banking sector is sound, save for the a few governance challenges that caused three banks to be placed in receivership.
Rotich spoke on the sidelines of the ongoing World Economic Forum in Rwanda, where he said the CBK will enhance its oversight capacity to be able to carry out audits in the banking sector, especially on system audits.
“We are seeing the cases of these three banks as isolated. The health of the financial sector remains strong," he said.
“However there are some practices which we have seen in some of the institutions that went under, which we are now trying to watch and see that they should not be happen in any of the banks.”
Rotich cited CBK's measures on non performing loans, reporting rules as well as enhancement tof oversight capacity of the regulator to detect any anomalies in the banks.
“More audits especially system audits is what we are going to put more emphasis on,” Rotich said.