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UPDATE 2-Tea and flowers to keep rising Kenyan current account deficit in check
May 30, 2017 / 11:11 AM / 6 months ago

UPDATE 2-Tea and flowers to keep rising Kenyan current account deficit in check

(Adds details on deficit)

By George Obulutsa

NAIROBI, May 30 (Reuters) - Kenya’s central bank governor on Tuesday said the country’s current account deficit will rise this year but be held down by exports of tea and horticulture products.

Governor Patrick Njoroge told a news conference the current account defit was likely to rise to 5.8 percent of gross domestic product from 5.2 percent in 2016.

But the commodities inflows would help to keep it from widening further.

In January, the bank said it expected the current account deficit to be around 5.3 percent of GDP in 2016, down from 6.8 percent in 2015.

“We continue to project a current account deficit of 5.8 percent for the year, that is 2017, which we see as an appropriate level,” he said.

Njoroge said the final current deficit figure for last year was 5.2 percent of GDP. The deficit stood at 6 percent in March.

“Our export sector has been doing well in some commodities, for instance, tea and horticulture,” he said.

“Imports also have remained low. Of course there are seasonal issues; just recently we imported a lot of rolling stock for the SGR (standard gauge railway),” he added, referring to months when the deficit rose.

In the year to February, Kenya’s current account deficit widened to 5.8 percent of GDP from 5.5 percent in the same month a year earlier.

Njoroge was speaking a day after the central bank held its benchmark lending rate at 10.0 percent, saying the policy reduced the threat of demand-driven inflation. (Reporting by George Obulutsa; Editing by Jeremy Gaunt)

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