The Central Bank of Kenya estimates the current account deficit at 6.2% of GDP in 2017,

    0
    304

    For the current financial year ending June 2018, about Kshs. 658 billion has been budgeted towards serving debt, which was estimated at Kshs. 4.55 trillion in December 2017, up from Kshs. 4.48 trillion in September. It is gauged that Kshs. 4.57 of every Kshs. 10 collected by the taxman will go towards servicing debt. The fact that a lot of short-term debt is being gobbled up and the budget deficit just keeps widening means that there will be a lot of repayment pressure on taxpayers. Moreover, utilization of debt for financing recurrent expenditure is an extremely unpleasant thing to contemplate.

    The Central Bank of Kenya estimates the current account deficit at 6.2% of GDP in 2017, expected to narrow to 5.4% of GDP in 2018 due to lower food imports as rainfall stabilizes, lower imports in the second phase of the SGR, growth in diaspora remittances, tourism and exports.

    The CBK foreign exchange reserves last stood at $7,009 million (4.7 months of import cover). These reserves together with precautionary arrangements with the IMF, equivalent to $1.5 billion, continue to provide an adequate buffer against short term shocks in the foreign exchange market.

    Private sector credit growth came in at 2.4% in the 12 months to December 2017, slightly higher than the 2% in October 2017. Credit growth in manufacturing was 13%, in domestic trade it was 10.5%, while the real estate sector experienced a more modest 8.6% credit growth.

    Economic growth averaged 4.7% in the first three quarters of 2017, compared to 5.7% in a similar period in 2016. The service sector remained the main source of growth, particularly MSMEs. The MPC Private Sector Market Perception Survey conducted in January 2018 showed an upsurge in optimism by the private sector for the economic prospects in 2018. More than 90% of respondents were optimistic about prospects for 2018, compared to 65% in November 2017.

    According to Trading Economics, a macroeconomics data provider which has more than 20 million economic indicators for 196 countries:

    Inflation rose 4.8 percent year-on-year in January of 2018, after a 4.5 percent gain in the previous month. Prices advanced at a faster pace after easing for five consecutive months, mostly due to food and housing and utilities. Inflation rate in Kenya averaged 10.06 percent from 2005 until 2018, reaching an all-time high of 31.50 percent in May of 2008 and a record low of 3.18 percent in October of 2010.

    On a monthly basis, consumer prices rose 1.32 percent in January 2018, following a 0.54 percent increase in the previous month. Prices went up faster for food and non-alcoholic beverages (1.69 percent compared to 0.25 percent in December), namely because of the expiration of the maize subsidy. In addition, cost advanced further for housing and utilities (0.90 percent compared to 0.27 percent), mainly due to higher prices of house rents, kerosene and charcoal. In contrast, cost of transport slowed to 1.53 percent from 2.44 percent, perhaps due to competition.

    Consumer Price Index CPI in Kenya increased to 185.47 Index Points in January from 183.05 Index Points in December of 2017. Consumer Price Index CPI in Kenya averaged 140.91 Index Points from 2009 until 2018, reaching an all time high of 187.64 Index Points in May of 2017 and a record low of 99 Index Points in January of 2009. CPI measures changes in the prices paid by consumers for a basket of goods and services. This is not a good sign in a country where most of the population is earning Kshs. 25,000 or less.- KWS

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here