Reduced imports of food and supplies for the nearly completed standard gauge railway project will help narrow the country’s current account deficit to about 5.8 per cent of the gross domestic product (GDP) by December supported by rising dollar inflows from remittances, tourism receipts, the Central Bank of Kenya (CBK) said.
The country’s current account deficit — the difference between the value of imports and exports — stood at 6.4 per cent in July in the wake of an upsurge of grain imports under a government subsidy programme to address a sharp rise in the cost of maize flour.
“The current account deficit is expected to narrow to 5.8 per cent of GDP by December 2017 as the bulk of the SGR-related imports are completed, while the expected favourable weather conditions will reduce reliance on food imports,” CBK Governor Patrick Njoroge said in a statement following the Monetary Policy Committee meeting which kept the chief lender’s rate steady at 10 per cent.
Rising dollar inflows from remittances and recovery in tourist receipts are also seen keeping the shilling stable against the globally-pressured US dollar.
Cash sent in by Kenyans abroad hit a record $1.777 billion (Sh1583.53 billion) in 12 months ended July, fresh data from the CBK showed, a growth of 7.7 per cent year-on-year.