The country’s goods exports rose by 8.8% from 2023 to August 2024, primarily due to increased agricultural commodity exports and re-exports.
According to the Central Banks Monetary Policy Committee (MPC), Exports of tea, and vegetables and fruits increased by 3.9 percent and 14.1 percent, respectively, while re-exports were 73.5 percent higher in the period.
The MPC convened today to review its past decisions and measures aimed at ensuring inflationary expectations and maintaining exchange rate stability.
In a press release today, MPC reported a 14.4% increase in exports in the first eight months of 2024 compared to the same period in 2023.
The country’s trade deficit is estimated to be 3.8% of GDP in 2024, up from 3.7% in 2023 and projected to be 4.0% in 2024. On the other hand, the MPC reported a 7.3% increase in imports in the first eight months of 2024 compared to 2023, and a 21.0% increase in tourist arrivals from 12 months to August 2024.
Central Bank Governor Kamau Thugge reported a 12.7% increas
e in remittances to USD 4,645 million from August 2024 to August 2024, and a 16.4% increase in the first eight months of 2024.
He added that CBK foreign exchange reserves, which currently stand at USD 8,247 million (4.24 months of import cover), continue to provide adequate cover and a buffer against any short-term shocks in the foreign exchange market.
The banking sector, he explained has remained stable and resilient, with strong liquidity and capital adequacy ratios and with ratio of gross Non-Performing Loans (NPLs) to gross loans standing at 16.7 percent in August 2024 compared to 16.3 percent in June.
‘Increases in non-performing loans (NPLs) have been observed in various sectors, including transport, communication, personal and household, trade, real estate, and manufacturing, with banks making adequate provisions for these NPLs,’ Thugge said
Moreover, Growth in commercial bank lending to the private sector, he explained stood at 1.3 percent in August 2024 compared to 3.7 percent in July, partly re
flecting exchange rate valuation effects on foreign currency denominated loans following the appreciation of the Shilling, and the lagged effects of monetary policy tightening.
In August, local currency-denominated loans experienced a 5.2% growth, while foreign currency-denominated loans, accounting for 26% of total loans, contracted by 10.6%. Hence, the Committee predicts that the FY2024/25 Supplementary Budget I will reduce the fiscal deficit to 4.3% of GDP from 5.2% in FY2023/24.
The medium-term fiscal consolidation aims to decrease debt vulnerabilities and increase the present-value-of-debt to GDP ratio towards the target anchor of 55%. According to the MPC, Global inflation has continued to moderate, with central banks in the major economies including the US Federal Reserve, lowering interest rates. International oil
However, prices have moderated, but the risk from the Middle East conflict remains elevated following the recent escalation of tensions though food inflation has risen slightly, mainly dr
iven by higher edible oil prices.
Lastly, the next MPC meeting will take place in December 2024.
Source: Kenya News Agency
