Kenya’s balance of payments position declined to a surplus of 1.04 billion U.S. dollars in the year leading to September 2023, an equivalent of 1 percent of the gross domestic product (GDP), the National Treasury said in a new report released Thursday.
This was a fall from a surplus of 2.2 billion dollars, or an equivalent of 2 percent of the GDP in September 2022.
The institution attributed the fall to a decline of inflows in the financial account, reflecting concerns about financial sector stability in the advanced economies following the hiking of benchmark interest rates.
“Net financial inflows slowed down but remained vibrant at 3 billion dollars in the year to September 2023 compared to 4.7 billion dollars in September 2022. The net financial inflows were mainly in the form of other investments, financial derivatives, and direct investments,” the institution noted in the report Quarterly Economic and Budgetary Review.
During the period, Kenya’s exports contracted 2 percent to 7.2 billion dollars due to a decline in horticultural shipment particularly of cut flowers despite an improvement in receipts from tea and manufactured exports.
“Similarly, imports declined by 13.2 percent to 17 billion dollars in the 12 months to September 2023, mainly due to lower shipments of infrastructure-related equipment, manufactured goods, oil, and chemicals,” Treasury said.
Oil prices remained elevated on account of increased geopolitical fragmentation and global oil supply cuts by major oil exporters, particularly Saudi Arabia and Russia, the Treasury observed.