- The current account deficit narrowed by 7.6 per cent to Sh101 billion from Sh109.3 billion the same quarter in 2018
- The drop was however underpinned by low export value, with the KNBS data showing that total exports declined by 3.2 per cent
Kenya's current account deficit narrowed by 7.6 per cent year-on-year in the quarter to September 2019, the second least level since 2016 on lower import bill.
The quarterly balance of payment data released Tuesday by the Kenya National Bureau of Statistics (KNBS) shows the current account deficit narrowed by 7.6 per cent to Sh101 billion from Sh109.3 billion the same quarter in 2018.
This was the second-lowest trade deficit in 13 quarters since September 2016, with the being the first quarter of 2019 when a the current account narrowed by to just Sh78.8 billion.
The state statistician said the decrease in the current account deficit was mainly driven by improved balance of payment as well as reduced value of food imports.
‘’Merchandise trade balance decreased by 6.7 per cent from a deficit of Sh254.3 billion in the third quarter of 2018 to a deficit of Sh237.3 billion in the third quarter of 2019 mainly as a result of 5.3 per cent decline in imports,’’ KNBS said.
International trade in service receipts increased by 100 basis points while service payments grew by 2.5 per cent resulting in a 2.4 per cent decline in the net inflows to a surplus of Sh40.3 billion.
Remittances from the diaspora increased by 5.1 per cent to Sh68.0 billion in the third quarter of 2019 and supported the increase in the secondary income account to a surplus of Sh128.9 billion.
Although net inflows in the financial account more than halved from a surplus of Sh98.5 billion in the third quarter of 2018 to a surplus of Sh40.9 billion in the corresponding quarter of 2019, the stock of gross official reserves increased by 13.4 per cent to stand at Sh978.6 billion as at end of September 2019.
This saw the overall balance of payments post a surplus of Sh41.3 billion from a deficit of Sh39.2 billion in the third quarter of 2018.
The drop in the current account deficit was however underpinned by low export value, with the KNBS data showing that total exports declined by 3.2 per cent decrease in total exports to Sh145.9 billion.
During the quarter under review, domestic export earnings reduced by 5.6 per cent to Sh124.9 billion from Sh132.3 billion in the same quarter of 2018.
This was occasioned by declines in export earnings from the leading commodities; tea (21.2 per cent), horticulture (10.7 per cent), coffee (16.7 per cent); and titanium ores and concentrates (20.6 per cent).
Exports to Asia fell by 13.4 per cent to Sh38 billion compared to Sh43.8 billion in the third quarter of 2018, with the value of exports to Pakistan shrinking by 29.4 per cent, Saudi Arabia (46.7 per cent) and India (46.8 per cent).
The decrease in domestic exports of tea to Pakistan and re-exports of Kerosene type Jet fuel to Saudi Arabia were the main contributors to the overall decline in total exports to these destinations.
The statistics agency said that Africa remained the leading destination for Kenya's exports, accounting for 38.9 per cent of the country's total exports in the quarter.
Total exports to the EAC grew by 14.3 per cent from Sh31.2 billion in the third quarter of 2018 to Sh35.6 billion in the third quarter of 2019 largely on account of increased exports to Rwanda and Tanzania which rose by 56 per cent and 17.3 per cent, respectively.
KNBS said that the stock of public external debt grew by 19.4 per cent year –on year from Sh2.6 trillion as of the end of September 2018 to Sh3.1 as of September 2019.
Commercial banks accounted for 34.3 per cent of the stock of public external debt, having risen by 19 per cent from Sh898.3 billion registered in the third quarter of 2018.
The stock of bilateral and multilateral public external debt similarly grew by 26 per cent and 14.1 per cent, respectively over the same period.