NAIROBI, Kenya, Jun 11 – Treasury Cabinet Secretary Ukur Yatani has projected a Sh840. 6 billion (7.5 percent of GDP) fiscal deficit for the year 2020/2021 compared to 842.7 billion in the 2019/2020 financial year, an equivalent of 8.3 percent of the country’s GDP.
While delivering his inaugural budget speech since his appointment as Treasury CS, he noted that the 2020/2021 deficit will be financed through net external financing amounting to Sh347 billion, net domestic financing of Sh493.4 billion and net domestic repayment of Sh627 million.
Yatani however said the fiscal deficit is expected to drop to Sh768.8 billion in 2021/2022 and Sh570.4 billion in 2023/2024.
Yatani projected the government’s expenditure at Sh2.79 trillion, a 24.7 per cent representation of total GDP.
Of the total expenditure, recurrent budget was projected at Sh1.82 trillion or 16.2 per cent while ministerial development expenditure (including foreign finance projects) was projected at Sh633.1 billion
“To achieve these targets we will contain growth in non-core recurrent spending and enhance efforts in revenue collection, we shall closely monitor the economic impact of COVID-19 pandemic and once economy recoveries, we will review our fiscal plan including tax measures to strengthen public finances to sustain public agenda,” he noted.
He highlighted that the increased fiscal deficit was driven by the COVID-19 pandemic which disrupted the government’s economy recovery programs which was expected to bridge the fiscal gap.
The Treasury CS proposed the amendment of the Finance Bill (2020) to expand the revenue collection capacity by Kenya Revenue Authority while acknowledging that tax incentives have limited government’s capacity too fund critical expenditures
“A critical review of the incentives show that consumers have not benefited through commensurate reduction in the cost of goods and services . Some of these incentives have given undue advantage some sectors due advantage to some sector players over others thus entrenching unfairness and stifling competition,” he said.