Kenya's account deficit to fall to 5.5 pct for 2016/2017
08 September 2016, 16:14
Nairobi - Kenya's current account deficit is likely to reduce to 5.5 percent in the 2016/2017 financial year, down from an estimated 8 percent the previous year, an International Monetary Fund (IMF) official said on Wednesday.
IMF Kenya Resident Representative Armando Morales told Xinhua in Nairobi that the lowering is due to reduction of the price of oil in the international market.
"Oil constitutes a significant portion of country's imports and so the price of oil has big impact on current account deficit," Morales said.
"Reduction of imports of capital goods is also expected and this will help to lower the current account deficit," Morales said on the sidelines of the launch of Kenya Economic Report 2016.
He said a contraction of the trade deficit will reduce external pressure on the economy, which he said a move in the right direction.
According to the National Treasury, the country's fiscal deficit was 7.6 percent of the Gross Domestic Product in the last financial year, and predicts that it will rise to 9.3 percent in the current financial year.
IMF is set to release it projections for the fiscal deficit for the 2016/2017 financial year later in the year after gathering more information.
Morales said that a widening fiscal deficit could affect the rates at which government borrows through treasury bills.
The IMF official noted that the fiscal deficit is also impacted by the rate at which government executes its expenditure.