- According to the Kenya Economic Update by the World Bank, the impact of COVID-19 on the external account would be enormous.
- According to the International Monetary Fund, the current account balance in the country is projected at negative 4.6 down from negative 4.5 last year.
Kenya's external account balance is under pressure due to the expanding in financing rising from the current world coronavirus pandemic.
According to the Kenya Economic Update by the World Bank, the impact of COVID-19 on the external account would be enormous.
This will be mainly through weak tourism receipts, low exports and remittances receipts, as well as more pressure on the exchange rate.
The current account deficit is expected to narrow from 4.6 percent of GDP in 2019 to 4.5 percent in 2020 as decline in imports of goods and services more than outweighs a sharp contraction in exports of goods and services.
The Central Bank of Kenya also expects the account deficit to narrow slightly .
Imports are expected to decrease from 20.4 per cent of GDP in 2019 to about 18.8 per cent of GDP in 2020, mainly due to a lower oil import bill and reduced import of capital and transportation equipment.
Exports are also expected to slow down from about 11.6 per cent of GDP in 2019 to about 10.5 percent of GDP in 2021, owing in part to weak external demand, but also significant contraction in manufacturing exports.
Tourism and remittance inflows are also expected to contract significantly due to COVID-19.
“Remittances are a vital source of income and the ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home,” said David Malpass, World Bank Group president.
The decline in remittances is already being felt in Kenya with Central Bank of Kenya data showing that Kenyans abroad sent home $218.9 million(Sh23.3 billion) million in March compared to $240.9 million(Sh 25.6 billion) sent in January.
According to the International Monetary Fund, the current account balance in the country is projected at negative 4.6 down from negative 4.5 last year.
The IMF assisted in boosting the country's external position by doubling Kenya's reserve of foreign currency to Sh75 billion.