Kenya witnessed a 14.1% increase in remittance inflows in August 2023, with the U.S. accounting for 54% of the total.
According to the Central Bank of Kenya (CBK), remittance inflows in August totalled USD 354.3 million compared to USD 310.5 million in August last year, an increase of 14.1 per cent.
The cumulative inflows for the last 12 months to August totalled USD 4120 million, compared to USD 3992 million in the same period last year, an increase of 3.2 per cent.
“The strong remittances inflows continue to support the current account and stability of the exchange rate,” said CBK.
For the week ending September 14, the exchange rate of the Kenya Shilling was Sh146.66 per USD, compared to Sh146.04 per USD on September 7.
On a year-to-date basis, the shilling has depreciated by 18.9% against the dollar, adding to the 9.0% depreciation recorded in 2022.
As of September 14, the usable foreign exchange reserves stood at USD 7.1 billion, equivalent to 3.8 months of import cover. The Central Bank of Kenya (CBK) noted in a weekly bulletin that this meets the statutory requirement to maintain at least 4 months of import cover.
Current Account Balance
Kenya’s current account deficit narrowed by 39.0 per cent to Kshs 84.9 bn in Q1’2023 from Kshs 139.3 bn recorded in Q1’2022 despite a 27.3 per cent deterioration in the primary income balance to a deficit of Kshs 56.8 bn in Q1’2023 from a deficit of Kshs 44.6 bn in Q1’2022.
Q1’2023 Current Account Balance
|Merchandise Trade Balance||(328.1)||(303.6)||(7.5%)|
|Service Trade Balance||49.3||56.0||13.6%|
|Primary Income Balance||(44.6)||(56.8)||27.3%|
|Secondary Income (Transfers) Balance||184.1||219.54||19.2%|
|Current Account Balance||(139.3)||(84.9)||(39.0%)|
Source: Kenya National Bureau of Statistics (KNBS), All values in Kshs bn
The current account deficit is projected to widen to 5.3 per cent of GDP in 2023 due to the depreciating Kenyan shilling and the implementation of the Finance Act 2023 which introduced an increased tax burden on businesses.