MONETARY POLICY

COMMITTEE MEETING
BACKGROUND INFORMATION

Wednesday, May 31, 2023

Dr. Patrick Njoroge
 Global inflation:
1 Inflation in major economies has continued to ease with declines in
commodity prices, and impact of monetary policy responses

Overall inflation (y/y, percent)

12.0

10.0

8.7
8.0
7.0
Percent (%)

6.0
4.9

4.0 4.7

2.0

0.0 0.1

-2.0
Jun-20
Jul-20
Aug-20
Sep-20

Jun-21
Jul-21
Aug-21
Sep-21

Jun-22
Jul-22
Aug-22
Sep-22
Apr-22
Mar-20
Apr-20

Mar-21
Apr-21

Mar-22

Mar-23
Apr-23
Dec-20
Jan-21

Dec-21

Dec-22
May-20

Oct-20

May-21

Oct-21

Jan-22

May-22

Oct-22

Jan-23
Nov-20

Feb-21

Nov-21

Feb-22

Nov-22

Feb-23
US UK Euro Zone China India

Source: Websites of Statistics Offices of respective countries

 International crude oil prices:
2 The price of oil has declined due to weak demand amid increased
uncertainties to global growth

Murban oil price (USD, per barrel)

135.0
130.2
130.0
125.0 122.5
120.0
120.0
115.0
110.0 108.7 Average oil price in 2022 was
105.0 USD 98.6 per barrel, compared to USD
81.1 per barrel for Jan to May 26, 2023
100.0
95.0
90.0 88.5

85.0 86.8 May 26,

80.0 USD 76.3
81.2
75.0 77.2
75.0
70.0 71.4
65.0
60.0
1-Mar-22

6-Mar-23

5-Apr-23
19-Jun-22
29-Jun-22

19-Jul-22
29-Jul-22

17-Sep-22
27-Sep-22

16-Nov-22
26-Nov-22

5-Jan-23
18-Aug-22
28-Aug-22

7-Oct-22

25-Apr-23
16-Dec-22
26-Dec-22
11-Mar-22
21-Mar-22
31-Mar-22
10-Apr-22
20-Apr-22
30-Apr-22

6-Nov-22

4-Feb-23

16-Mar-23
26-Mar-23

15-Apr-23

5-May-23
30-May-22
9-Jun-22

9-Jul-22

17-Oct-22
27-Oct-22
8-Aug-22

7-Sep-22

15-Jan-23
25-Jan-23
10-May-22
20-May-22

6-Dec-22

14-Feb-23
24-Feb-23

15-May-23
25-May-23
Source: Oilprice.com
 Global commodity prices:
3 Prices of palm oil, fertilizer-DAP, and wheat have declined with the easing
of international supply chain constraints

Global prices of selected commodities (USD, per metric tonne)

2000
1800 1,683 1,717

1600 1,548
1,501

1400
1200 1,131
1,057 1,026
972 1,005
1000 954 946 940 942 950
909 889
860 843
784 784
800 752 749 752
666
601 631 613 606 637
600 494 495 522
312 460 423
383 383 419 380 395 370 378
400 232 315
200
0

Palm oil Maize Wheat Fertiliser (DAP)

Source: World Bank Commodity Prices

 4 Global supply chain constraints:
Global freight transportation costs have declined

Global container freight rate index of a 40 feet container (in US Dollars)

12,000 Sept. 2021
USD 10,839

10,000

8,000

6,000

4,000
May 2023
USD 1,584
2,000

0
Jan-19

Jan-20

Jan-21

Jan-22

Jan-23
Nov-22
Sep-19
Nov-18

May-19
Jul-19

Nov-19

May-20
Jul-20
Sep-20
Nov-20

May-22
Jul-22
Sep-22

May-23
Mar-19

Mar-20

Mar-21
May-21
Jul-21
Sep-21
Nov-21

Mar-22

Mar-23
Source: Statista.com
 Global economic outlook:
5 A weaker global growth is expected in 2023, reflecting the increased
uncertainties

Global and selected countries’ real GDP growth (y/y, percent)

2023 Proj. 2024 Proj.
Difference Difference
Apr. 2023 Apr. 2023
2021 2022 from Jan. from Jan.
WEO WEO
Act. Act. 2023 WEO 2023 WEO
World 6.3 3.4 2.8 -0.1 3.0 -0.1
Advanced Economies 5.4 2.7 1.3 0.1 1.4 0.0
United States 5.9 2.1 1.6 0.2 1.1 0.1
United Kingdom 7.6 4.0 -0.3 0.3 1.0 0.1
Japan 2.1 1.1 1.3 -0.5 1.0 0.1
Euro area 5.4 3.5 0.8 0.1 1.4 -0.2
Emerging Market and Developing Economies 6.9 4.0 3.9 -0.1 4.2 0.0
China 8.4 3.0 5.2 0.0 4.5 0.0
India 9.1 6.8 5.9 -0.2 6.3 -0.5
Russia 5.6 -2.1 0.7 0.4 1.3 -0.8
Sub-Saharan Africa 4.8 3.9 3.6 -0.2 4.2 0.1
South Africa 4.9 2.0 0.1 -1.1 1.8 0.5
Nigeria 3.6 3.3 3.2 0.0 3.0 0.1
Kenya 7.5 5.4 5.3 0.2 5.4 0.0

Source: IMF World Economic Outlook (WEO)

 Domestic inflation:
6 Overall inflation declined in April 2023, mainly driven by lower food prices

Inflation by broad category (y/y, percent)

16.0 15.3 15.3 15.5 15.8 15.4

13.8 13.8 13.8 13.8 13.4

14.0 13.3 13.4 13.2
12.4 12.6 12.7 12.8
12.1 11.7
12.0 11.6

9.9 10.0 10.1

10.0
8.7 9.0 9.6 9.5
8.5 8.0 8.6 9.2 9.1 9.0 9.2 9.2
8.5
8.0 7.9 8.3 7.9
6.5 7.1
5.8 6.5
6.0
5.6
5.1 4.3 4.4 4.4 4.1
4.1 4.1
3.8
4.0 3.2 3.4
2.9 3.1
2.5 2.6
2.0 2.2
2.0

0.0

Food Fuel NFNF Overall Inflation

Source: Kenya National Bureau of Statistics and Central Bank of Kenya

7 Domestic inflation:
Food prices remained the main driver of overall inflation in April 2023

Contributions to Overall Inflation (percentage points)

10.0 9.6 9.2
9.2 9.1 9.1 9.0 9.2
9.0 8.3 8.5
1.1 1.6 1.2 1.0
7.9 1.3 1.4 1.4 7.9
8.0 1.0 1.1
7.1
7.0 6.5 1.4 1.3
2.5 2.3 2.4
1.3 1.8 1.9 2.7 2.9 3.2
6.0 5.6 1.0 2.9
5.1 1.5
5.0 1.1 1.3 2.8
1.1
1.0
4.0 0.9
0.9
3.0 5.6 5.7 5.6
5.5 5.5 5.1
4.5 5.0 4.7 4.9 5.0
2.0 4.4
3.6 3.8
3.1
1.0
0.0

Food Fuel NFNF

Source: KNBS and CBK

 Main drivers of food inflation:
8 Food inflation declined in April 2023, mainly due to lower prices of
vegetables and improved supply of key non-vegetable food items.

Contributions to food inflation (percentage points)

18.0
15.3 15.5 15.8 15.4
16.0 15.3
13.8 1.0 1.6 13.8
14.0 2.3 1.7 2.1 13.3 13.4
12.4 12.8
12.1 1.6
2.3 1.3
12.0 2.5 3.0
9.9 2.8 10.1
10.0 3.8
8.7 1.4
8.0 3.2
2.8 14.5 14.1
12.9 13.6 13.3
6.0 11.5 12.2 11.5 10.8 10.3
9.6 8.7
4.0 8.3
5.9 6.7
2.0

0.0

Non-Vegetables Vegetables Food Inflation

Source: KNBS and CBK

 Main drivers of food inflation:
9 The contribution of prices of wheat, maize, milk and edible oils, to
overall inflation has moderated in recent months with improved supply

Contribution of wheat, maize, milk, and edible oils to overall Inflation (percentage points)
3.5 3.4
3.3
3.2 3.1
3.0 2.9
2.8

2.5
2.5 2.3 2.3
2.1
2.0 1.9 1.9

1.5
1.5 1.4 1.4
1.2 1.2 1.3
1.0
1.0 0.9 0.9
0.7 0.8

0.5

0.0

Source: KNBS and CBK

 Inflation outlook:
10 Sugar prices have risen sharply

Actual and projected sugar inflation (y/y, percent)

50.0 • Domestic sugar production has
42.7 reduced due to low cane deliveries:
40.0 o Shortage of mature cane arising
36.3
from premature harvest of
sugarcane to meet high
30.0
24.7 demand of millers.
23.2
21.7 22.0 o Some farmers switched to maize
20.0
15.6 16.2 17.2 17.0 following high prices of the
13.3 13.9 commodity
10.0
• Sugar prices have also risen globally
1.1 reflecting: lower production in India,
0.0
China, Thailand and EU; and slow
-1.6 start of the harvests in Brazil due to
-3.2
-10.0 above-average rains.
Feb-22

Jun-22

Feb-23
Sep-21

Jan-22

Mar-22

Sep-22

Jan-23

Mar-23
Nov-21

Nov-22
Oct-21

Apr-22

Apr-23
Aug-21

May-22

Oct-22

May-23
Dec-21

Aug-22

Dec-22
Jul-22

• The recently announced

Government measures to allow duty-
Source: KNBS for data to April 2023 free imports on specific food items
CBK May 2023 Agriculture Sector Survey for the May 2023 data including sugar, are expected to
moderate prices.
 Domestic economy:
11 The economy is expected to continue to strengthen in 2023, supported by the
resilient services sector and expected recovery in agriculture

Real GDP growth (y/y, percent)

2023
2018 2019 2020 2021 2022 Annual
Q1 Est.
Proj.
1. Agriculture 5.7 2.7 4.6 -0.4 -1.6 4.1 5.1
2. Non-Agriculture (o/w) 5.6 5.7 -1.4 9.5 6.3 5.4 5.7
2.1 Industry 3.8 4.0 3.3 7.5 3.9 4.3 4.4
Mining & Quarrying -4.7 4.3 5.5 18.0 9.3 6.8 2.8
Manufacturing 3.6 2.6 -0.3 7.3 2.7 2.9 3.5
Electricity & water supply 3.6 1.7 0.6 5.6 4.9 5.5 5.5
Construction 6.1 7.2 10.1 6.7 4.1 5.3 5.6
2.2 Services 6.1 6.5 -1.8 9.8 7.0 5.7 6.0
Wholesale & retail Trade 5.9 5.3 -0.4 8.0 3.8 5.0 6.0
Accommodation & food services 15.6 14.3 -47.7 52.6 26.2 9.3 11.3
Transport &Storage 6.0 6.3 -8.0 7.4 5.6 5.7 6.5
Information & Communication 7.9 7.0 6.0 6.1 9.9 7.8 8.2
Financial & Insurance 2.7 8.1 5.9 11.5 12.8 5.2 5.6
Public administration 7.9 8.4 7.0 6.0 4.5 4.8 4.7
Professional, Admin & Support
6.9 6.8 -13.7 7.1 9.4 7.4 6.7
Services
Real Estate 6.5 6.7 4.1 6.7 4.5 4.2 4.5
Education 6.4 5.7 -9.2 22.8 4.8 5.5 5.0
Health 5.4 5.5 5.6 8.9 4.5 5.0 5.2
Other Services 3.3 4.3 -14.6 12.5 5.7 7.6 6.9
FISIM 3.7 9.5 -1.8 5.3 1.5 1.2 2.1
2.3 Taxes on products 5.9 3.9 -8.0 11.9 7.0 5.9 6.1
3. Real GDP Growth 5.6 5.1 -0.3 7.6 4.8 5.1 5.5
Source: Kenya National Bureau of Statistics and Central Bank of Kenya

|
 Domestic economy:
12 Leading indicators point to strong economic performance in the first quarter of
2023, mainly driven by activity in the services sector and recovery in agriculture

Composite Index of Economic Activity and real GDP (y/y, percent)

14.0

11.0 10.3 9.4

9.1 8.6
8.7 8.3
8.0 7.2
6.0 6.3 5.2
4.8 5.1 5.0 4.6 4.6 3.8 5.1
4.8 4.8 4.4 4.8 4.7
5.0 4.0 4.3 3.9

2.0 2.4
2.0
0.1

-1.0
-1.4
-4.0 -3.4 -3.6
-4.1
-5.1
-7.0

Composite Index of Economic Activity (CIEA) Real GDP

Source: Kenya National Bureau of Statistics and Central Bank of Kenya

|
 Agricultural production:
13 Performance of agriculture expected to improve in 2023, with the
improved weather conditions across the country

Actual volume and growth in horticulture exports Actual and Projected Food Crops Production
(Million bags)
80,000 30.0 2023
2020 2021 2022
Proj.
25.0
`
70,000
25.0 42.2 36.7 34.3 44.6
Maize
60,000
Wheat 4.5 2.7 3.0 4.6
Volume in metric tonnes

20.0

y/y, percent (%)

50,000 Rice 2.0 2.1 2.1 1.2

Beans 8.6 7.4 5.7 8.5

40,000 15.0
12.7
Irish Potatoes 21.1 23.3 20.0 20.8
30,000
9.1 10.0 3.5 1.5 1.3 2.3
8.2 Sorghum
20,000 1.7 0.7 0.7 0.9
Millet
5.0
10,000 Source: Kenya National Bureau of Statistics, and Ministry of
Agriculture projections as of May 2023

- 0.0
Jan
Feb

Oct
Mar
Apr

Aug
May
Jun
Jul

Sep

Nov
Dec

y/y (RHS) 2021 2022 2023

Source: Kenya Revenue Authority

 Sales turnover:
14 Activity in wholesale and retail trade, and manufacturing sectors has
remained resilient

Sales Turnover, Wholesale and retail trade Sales Turnover, Manufacturing Sector
250,000 25.0 250,000 20.0
17.7
21.2

200,000 17.7 20.0 200,000 15.0

11.5
150,000 15.0 150,000 10.0
KSh, Million

KSh Million
13.3

Y/Y, %

Y/Y, %
5.3
100,000 10.0
100,000 5.0

50,000 5.0
50,000 0.0

0.9
- 0.0 -2.9
- -5.0
Jan
Feb

Jan
Oct

Feb

Oct
Mar
Apr

Aug

Aug
May
Jun
Jul

Sep

Dec

Mar

Jun
Jul

Sep
Apr
May

Dec
Nov

Nov
Y/Y, % 2020 2021 2022 2023 Y/Y, % 2020 2021 2022 2023

Source: CBK
 15 Manufacturing activity:
Power consumption has remained strong

Total Power Consumption Trends of Large Power Consumption

1000 10.0 500 7.0
9.0 6.2
900 9.0 450
6.0
800 8.0 400 5.4

700 7.0 350 5.0

600 6.0 300

KwH, Million

KwH, Million
5.3 4.0

Y/Y, %

Y/Y, %
500 5.0 250

2.6 3.0
400 4.0 200

300 3.0 150

2.3 2.0
200 2.0 100
0.8 0.7 1.0
100 1.0 50

0 0.0 - 0.0

y/y (RHS) 2020 2021 2022 2023 y/y (RHS) 2020 2021 2022 2023

Source: Kenya National Bureau of Statistics

 Construction activity:
16 Recent trends in cement consumption and production largely reflect
completion of major infrastructure projects

Cement Consumption Cement Production

1000.0 0.0 1,000,000 -4.8

900.0 -1.0 900,000

-5.0
800.0 800,000
-2.0
700.0 700,000 -5.1
-3.0 -5.2
600.0 600,000

percent (%)
Tonnes '000'

-4.0

Percent

tonnes
500.0 500,000 -5.4
-5.0
400.0 400,000
-6.0 -5.6
300.0 300,000
-7.0
200.0 -6.9 200,000
-5.8
-8.0 -5.8
100.0 100,000
-8.5
0.0 -9.0 - -6.0

Y-o-Y (%) RHS 2020 2021 2022 2023 y/y (RHS) 2020 2021 2022 2023

Source: Kenya National Bureau of Statistics

 Sales Turnover:
17 Activity in accommodation and food services and transport and
storage sectors remains resilient

Sales Turnover: Transport and storage Sales Turnover: Accommodation and food services
90,000 30.0 30,000 40.0

80,000 23.8 25.0 34.1 35.0

17.3 25,000 32.6
70,000 20.0
30.0

60,000 15.0 20,000

25.0
KSh, Million

KSh, Million
50,000 7.8 10.0 20.6

Y/Y, %

Y/Y, %
15,000 20.0
40,000 5.0
15.0
30,000 0.0 10,000

10.0
20,000 -5.0
5,000 4.8
10,000 -10.0 5.0
-10.4
- -15.0 - 0.0
Jan
Feb

Jan
Jun

Sep
Oct

Feb

Jun

Sep
Oct
Jul

Jul
Mar
Apr

Aug

Mar

Aug
May

Apr
May
Dec

Dec
Nov

Nov
Y/Y, % 2020 2021 2022 2023 Y/Y, % 2020 2021 2022 2023
Source: CBK
 Private sector credit:
18 Growth in credit to the private sector has remained resilient

12 Months growth in credit to private sector (percent)

14.2
14.0 13.3 13.2
12.9
12.3 12.5 12.5 12.5
11.7 11.6
12.0 11.5
10.9

10.0
8.9
8.4 8.6
8.0 7.6 7.6 7.7 7.7 7.7

6.0

4.0

2.0

0.0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
2020 2021 2022 2023

Source: CBK
 Private sector credit:
19 Strong growth in credit to key sectors of the economy

12 Months growth in credit to private sector (percent)

24.0
Manufacturing 20.0 Trade
21.7
16.4
20.0 15.2 15.3
17.5 16.0 14.3
16.1 13.3 13.7
15.5 15.2 15.2 14.9 15.2 15.8 11.8 11.9
16.0 14.2 13.8 13.8 11.6 11.4 11.1
12.0
12.0 10.4 10.7
9.6 9.1
12.0 8.9
9.7 9.9
7.6 8.0
8.0
4.0
4.0

0.0 0.0

Transport and Communication Consumer durables

32.0 28.9 20.0
26.5 27.0
28.0
24.1 25.0 15.6 16.1 15.1
22.8 21.8 23.5 16.0 14.6 14.0 14.7 14.8 14.3 14.4 14.0
24.0 22.2 21.6
20.7 12.6 12.9 12.5 12.4 12.7 13.3
20.0 18.0
16.6 16.5 17.4 12.0
16.0 13.5
12.0 8.0

8.0
4.0
4.0
0.0 0.0

Source: CBK
 May 2023 Surveys:
20 Surveys show improved optimism by private sector firms about business
activity and economic growth prospects for the next 12 months

CEOS SURVEY: COMPANY AND SECTORAL GROWTH MARKET PERCEPTIONS SURVEY: OPTIMISM IN THE ECONOMIC
PROSPECTS (% OF RESPONDENTS) PROSPECTS BY BANKS (% OF RESPONDENTS)
100 4
6 8
15 4
13.9% 8.6% 10.3% 90 21 23 22
24.3% 18.2%
26.4% 80
35.2% 33.6%
33.1%
29.2% 41.1% 70
35.0%
33.9% 60
36.8%
38.7% 40.7% 50
79 94 92 89
40 79 77 78
56.9% 58.3%
46.7% 48.6% 30
36.8% 41.7%
26.1% 25.7% 20
10
NOV-22 JAN-23 MAR-23 MAY-23 NOV-22 JAN-23 MAR-23 MAY-23 5 3
0 0 0
COMPANY SECTOR May'22 Jul'22 Sep'22 Nov'22 Jan'23 Mar'23 May' 2023

Higher Same Lower Very Optimistic Optimistic Pessimistic Very pessimistic

MARKET PERCEPTIONS SURVEY: OPTIMISM IN THE ECONOMIC • Respondents in the May 2023 Surveys attributed
PROSPECTS BY NON-BANKS (% OF RESPONDENTS)
100 4 1 1 2 3
their improved optimism to:
4
90 12
24
14
22
o improved weather conditions, which are
23 27
80 34 expected to support agricultural
70
60
production,
50 71 73 o easing of inflation, and
40
59
68 74 65 69
o resilience of the private sector.
30
20
10 16 13
• However, respondents were concerned about
4 5 6 5
0
May'22 Jul'22 Sep'22
2
Nov'22 Jan'23 Mar'23 May' 2023
the proposed increase in taxation, rise in
electricity and fuel prices, and the weakening of
Very Optimistic Optimistic Pessimistic Very pessimistic the Kenya shilling.
 May 2023 Agriculture Sector Survey:
21 Retail prices of most key food items and animal products are expected to
decline in June 2023

Expected changes in retail prices in June 2023 (percent of respondents)

60%
40%
20%
0%
-20%
-40%
-60%
-80%

Eggs
Kale - Sukuma Wiki

Cabbages

Fresh packeted cow milk

Fresh unpacketed cow
Spinach

Carrots
Traditional Vegetables

Cooking Oil (Salad)

Cooking Fat
Tomatoes

Potatoes

Sugar
milk/ Fresh Cream
Vegetables Animal products Non Vegetable

• Prices of vegetable items expected to reduce further in June 2023 following harvests from the long rains
season.
• Prices of animal products are expected to decline following the long rains reported in March and April 2023
which has boosted the pasture availability.
• However, the price of cooking oil, cooking fat and sugar is expected to rise following a reported shortage
of sugar and high import costs of oil products.
 May 2023 Market Perceptions Survey:
22 Forward hotel bookings remain strong

Forward hotel bookings (percent of total bed capacity)

60
50
40
30
20
10
0
May 22 Jun 22 Jul 22 May-23 Jun-23 Jul-23
Mombasa 48 51 48 54 36 35
Nairobi 29 36 18 57 38 39
rest 27 18 15 46 36 30
average 35 35 27 52 37 35
Mombasa Nairobi rest average

• Forward bookings are supported by both foreign and domestic markets.

• Booking levels attributed to normal business cycle in conferencing facilities as corporate and
government institutions resume conferences.
• Challenges relate to high cost of living, and seasonal factors relating to low season.
 Balance of payments:
23 Exports of goods have remained strong, mainly driven by receipts
from tea and manufactured goods

12 months cumulative exports to April (USD Million)

1,800

1,600 1,567

1,389
1,400 1,358

1,216
1,200
1,044
1,000 909

800 727 712

686 690 669
627
600 526 545
501
454
400
278 299

200

-
Coffee Tea Horticulture Manufactured Raw Materials Chemicals and Miscelleneous Re-exports Other
Goods Related man. articles
Products

2022 2023

Source: CBK, KRA

 Balance of payments:
24 Improved receipts from tea exports to Kenya’s key markets
reflects higher international prices

12 months cumulative volume of Kenya’s tea exports 12 months cumulative value of Kenya’s tea
to April (Kgs million) exports to April (Ksh Billion)
250 70

219 61
204 209 60 56
200 191
51 50
173 50
150
150 39
40 37

30
100
24
757877 20
20 17
5250 14
42 131213
50
3026 10
21 222119 76
4 4 5

- -
Pakistan Egypt UK UAE Sudan Others Pakistan Egypt UK UAE Sudan Others
2021 2022 2023 2021 2022 2023

Source: KRA
 0.00
1.00
2.00
2.50
3.00

0.50
1.50
Week 1
25
Week 2
WEEK 3
WEEK 4
WEEK 5
WEEK 6
WEEK 7
WEEK 8
WEEK 9

Source: Mombasa Tea Auction

WEEK 10
WEEK 11
WEEK 12
WEEK 13
WEEK 14
WEEK 15
WEEK 16
WEEK 17
WEEK 18

Average price 2023

WEEK 19
WEEK 20
WEEK 21
prices due to demand
Balance of payments:

WEEK 22
WEEK 23
WEEK 24
WEEK 25
WEEK 26
WEEK 27
WEEK 28
WEEK 29
Average price 2022
WEEK 30
WEEK 31
WEEK 32
Average price comparison of tea from 2021 to 2023 (USD per Kg)

WEEK 33
WEEK 34
WEEK 35
WEEK 36
WEEK 37
WEEK 38
WEEK 39
WEEK 40
WEEK 41
Average price 2021

WEEK 42
WEEK 43
WEEK 44
WEEK 45
WEEK 46
WEEK 47
WEEK 48
Improved receipts from tea exports reflects higher international

WEEK 49
WEEK 50
WEEK 51
 Balance of payments:
26 Imports of goods increased largely due to oil imports, but imports of
infrastructure related equipment have declined due to completed projects

12 months cumulative imports to April (USD Million)

7,000

6,000 5,584

5,000 4,599
4,277
3,895 3,883
4,000 3,690
3,507
3,238 3,243 3,197
3,000

2,000

1,000

-
Oil Chemicals Manufactured Machinery & Other
Goods Transport Goods
2022 2023

Source: CBK, KRA

 Balance of payments:
27 Imports of goods increased mainly due to oil imports

12 months cumulative imports to April (USD Million)

14,000 13,269
12,508
12,000

9,855 9,542
10,000

8,000

6,000

4,000 2,841 3,099

2,925
2,259
2,000

-
consumer capital intermediate intermediate excl. oil

2022 2023

Source: CBK, KRA

 Services exports:
28 Receipts from services exports increased reflecting sustained
improvement in international travel and transport

Travel receipts (USD Million) Transport receipts (USD Million)

250.00
140.0

120.0
200.00

100.0

150.00
80.0

60.0 100.00

40.0

50.00
20.0

0.0 0.00
Jan

Feb

Oct
Mar

Apr

Aug
May

Jun

Jul

Sep

Dec
Nov

Jan

Feb

Mar

Apr

Oct
May

Aug
Jun

Jul

Sep

Nov

Dec
2020 2021 2022 2023 2019 2020 2021 2022 2023 2019

Source: CBK, KRA

 29 Tourism sector:
Tourist arrivals have remained strong

Monthly tourist arrivals

180,000
170,803
158,303 160,556
160,000 150,840 150,968
142,600
138,318 134,274 136,733
140,000 132,031 130,452 130,098

120,000 116,993
113,111
103,568 104,512
100,000 93,330 94,987 94,318
90,898 91,799
87,991
82,624
80,000
67,819
59,687 61,608 58,991
60,000 52,051
45,964 46,142
40,183 37,885
40,000 35,678
26,018
20,000 14,159

27 137 581 675

-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2020 2021 2022 2023

Source: Kenya Tourism Board

 30 Diaspora remittances:
Remittances inflows have remained strong

12 months cumulative remittances inflows to April (USD, Million)

4,500
3,968 3,985
4,000

3,500 3,308

3,000 2,750 2,799

2,500
2,234

2,000
1,736
1,619
1,500

1,000

500

0
2016 2017 2018 2019 2020 2021 2022 2023

Source: CBK
 Current account balance:
31 A narrower current account deficit is expected in 2023 supported by lower
international oil prices, resilient remittances and strong exports growth

Current account balance (percent of GDP)

0.0
-1.0
-2.0
-3.0
-4.0
-5.0 -4.8
-4.8 -5.1
-5.4 -5.4 -5.2 -5.2 -5.2
-6.0
-7.0 -6.3
-6.9
-8.0
-9.0
-10.0 -9.4
2014 2015 2016 2017 2018 2019 2020 2021 2022 Year to 2023
April Proj.
2023
Est.
Source: CBK
 32 CBK usable foreign exchange reserves:
Foreign exchange reserves remain adequate

CBK usable foreign exchange reserves (end period)

10,000 6
8,848 8,817
9,000
7,515 7,750
7,072 8,001 7,378 5
8,000
CBK Usable Reserves in US$ Millions

6,971 7,063
7,000 6,495
4
5,992
6,000
5,396 3.61
5,000 3

4,000 3,800
3,308 3,466
2,769 2
3,000

2,000
1
1,000

0 0

CBK Usable FX Reserves (LHS) Months of Import Cover (RHS)

Source: CBK as of May 26, 2023

 Exchange rates:
33 Some of the developed and emerging market currencies have
strengthened against the U.S. dollar so far in 2023

Major currencies vs. U.S. Dollar: January 1 to May 23, 2023

Source: Refinitiv, as at 23rd May, 2023

 Exchange rates:
34 Most African currencies have weakened against the U.S. Dollar so
far in 2023

African currencies vs. U.S. Dollar: January 1 to May 23, 2023

Source: Refinitiv, as at 23rd May, 2023

 Government net domestic borrowing:
35 The performance of the Government domestic borrowing programme
is at 54.4 percent of the revised target of Kes 434.9bn for FY 2022/23

Domestic borrowing performance in FY2022/23 Ratio of Treasury bills to bonds (percent)

100
against the Kes 434.9bn Target 15.3 14.1
90
26.4
100.0 300.0 80 35.8
90.0 249.1 249.2 70
238.0 236.7 250.0
80.0 60

Percent
203.4
70.0 50
Performance

180.7 200.0
60.0 154.3 40 84.7 85.9
73.6
50.0 150.0 30 64.2
40.0 105.3
90.3 20
30.0 100.0
54.5 10
20.0 32.9 50.0 0
10.0
- 0.0

T-Bonds T.Bills

Average Time to Maturity for Treasury bonds (Years)

• The disbursement of the recently approved World
9.5 9.1 9.0 9.1 9.1 9.0 9.1 8.9
8.9 9.0 8.9 8.9 Bank Development Policy Operation (DPO) and
9.0 8.6
8.5 other external inflows will help improve liquidity
8.0 7.5
7.7 conditions in the economy.
Years

7.5
7.0
6.5 6.2 6.2
6.0
5.5
 Fiscal performance:
36 The fiscal consolidation path over the medium-term is expected to
stabilize the rate of growth in public debt

Actual and expected fiscal deficit (percent of GDP)

Source: The National Treasury