Foreign exchange earnings from tourism and coffee rose the
fastest among Kenya’s major inflow sources in the one year to September,
going up by 15.6 and 13.7 per cent respectively.
Fresh
data from the Central Bank of Kenya (CBK) shows inflows attributable to
the travel account stood at $890 million (Sh92 billion) in the 12
months to September, up from $770 million (Sh79.6 billion) same period
last year.
Coffee earnings rose to $240 million (Sh24.8 billion) from $211 million (Sh21.8 billion) a year earlier.
Diaspora
remittances, which form the backbone of foreign inflows, also went up
significantly by 8.9 per cent to $1.83 billion (Sh189 billion) in the
period, while earnings from tea and horticulture also rose by two per
cent and 0.7 per cent to $1.33 billion (Sh137.5 billion) and $812
million (Sh84 billion) respectively.
“Strong diaspora
remittances, resilient inflows from tea and horticulture exports and
continued recovery in tourism continue to support the current account
and stability in the foreign exchange market,” said the CBK in a
statement outlining the background information on monetary policy
committee meeting.
Tea
volumes were hit by drought in the first half of the year amid flat
global prices. Coffee prices rose by 20 per cent in the year to
September to an average of Sh23,999 for a 50 kilogramme bag, raising
overall earnings in spite of an 11.3 per cent drop in supply to 34,092
tonnes.
CBK governor Patrick Njoroge said the rise in
inflows coupled with lower food import costs and the absence of
SGR-related imports in the last quarter of the year will see the current
account deficit narrow by December.
At the end of
September, the deficit stood at 6.5 per cent of GDP, but is now expected
to come down to 6.2 per cent by the end of the year.
It
will, however, be higher than the 5.2 per cent deficit recorded at the
end of last year, attributed to the tougher economic climate this year
which has affected productivity (and thus hurt exports). The import of
SGR equipment including rolling stock and the drought which loaded extra
food import costs on the exchequer contributed to the deficit.
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