This archive report was first published on 12 July 2021.
Kenya's current account deficit has reached a 5.5% of the country's GDP, according to data released by the Central Bank of Kenya (CBK) on July 12, 2021. This marks a widening of the deficit compared to 5.2% of GDP in the same period last year.
The current account deficit peaked at 7.2% of GDP in 2017, a year marked by election-related uncertainty. CBK attributes the recent increase to lower service receipts, which fell in 2020 and offset the growth in exports and overseas remittances.
Despite this, remittances from Kenyans working abroad have maintained an upward trend, reaching an all-time high of $315.8 million in May this year, a 22% increase from $258.2 million in May 2020.
The Central Bank of Kenya's foreign currency reserves have risen for the third consecutive week to $9.59 billion as of July 8, supported by inflows from the IMF, World Bank, and Eurobond IV. The reserves provide 5.86 months of import cover, exceeding the statutory requirement of at least 4 months.
Commercial banks' excess reserves surged to KSh13.9 billion last week, while the average interbank rate stood at 4.54% on July 8, down from 4.82% on July 1. The average value of interbank transactions increased to KSh 11.0 billion from KSh 7.5 billion in the previous week.
