Balance of payment surplus shrinks to Sh3.4b

NAIROBI, Tuesday

The country’s balance of payments surplus shrank to Sh3.4 billion ($45 million) in the year to September 2009 from Sh21.5 billion ($287 million) a year-ago, the Central Bank of Kenya said in its latest economic review.

"The deterioration was due to an increase in the current account deficit by 38.5 per cent, which offset a 20.8 per cent increase in the surplus of the capital and financial account," the Monthly Economic Review said. Balance of payment is the systematic record of all economic transactions between residents of one country and residents of other countries (including the governments).

The current account deficit widened to $2.352 billion in the year to September 2009 from $1.698 billion in the 12 months to September 2008.

The value of imported goods fell eight per cent to $10.14 billion in September last year from the same month previously, as the oil import bill declined on account of lower international oil prices.

Exports were also on a downward trend, declining by nine per cent to $4.474 billion.

External sales of horticultural produce fell by $86 million and those of manufactured goods were down by $109 million.

The main destination of Kenyan exports was Uganda, Britain and Tanzania, in that order. Official foreign exchange reserves went up $3.81 billion, equivalent to 4.1 months of import cover, at the end of October last year from $2.928 billion or 3.6 months of imports one year previously.

Domestic debt

The CBK said public debt increased to Sh1.09 trillion ($14.50 billion) in the first four months of the fiscal year (July-June) from Sh1.05 trillion in the same period the previous year.

"The external debt-to-GDP ratio decreased from 22.4 per cent in June 2009 to 21.8 per cent in October 2009, while the domestic debt to GDP ratio increased from 21.7 per cent to 23.2 per cent during the period," the report said.

The government’s budget deficit in the first four months of the fiscal year was 1.6 per cent of gross domestic product, which was within the target of 2.3 per cent of GDP on a commitment basis, CBK said.

Cement consumption, a key indicator of economic activity in the economy, rose 10.7 per cent in the first nine months of last year to 1.83 million tones, while production was up 8.3 per cent to 2.25 million tonnes.

— Reuters