The deficit narrowed to 4.9% of gross domestic product at the end of last year, Patrick Njoroge told a news conference, better than the bank's projection of 5.9%.
The improvement in the deficit was driven by higher export earnings from tea and manufactured goods, Njoroge said, as well as an increase in the amount of cash remittances sent home by Kenyans living abroad. The central bank's foreign exchange reserves remained adequate despite slipping below the statutory requirement of four months worth of import cover last week, the governor said, citing expected hard currency inflows.
Hard currency reserves slid to $7 billion last week, worth 3.92 months of import cover, the central bank said, from $7.38 billion the previous week, or 4.13 months worth of imports.