This archive report was first published on 11 June 2020.
As the country grapples with the economic impact of the Covid-19 pandemic, the government is facing a daunting task in keeping the Budget deficit at the projected 7.3 percent of gross domestic product (GDP) in the coming fiscal year.
Thursday, June 11, 2020
Analysts at NCBA and investment bank Genghis Capital have expressed concerns that tax projections contained in this year's budget remain ambitious in the face of the prevailing economic reality.
The Treasury targets total revenue and ordinary revenue of Sh1.871 trillion and Sh1.621 trillion respectively in the 2020/21 fiscal year.
However, Churchill Ogutu, head of research at Genghis Capital, notes that the revenue realism may be ambitious in the backdrop of the Covid-19 shock, citing slower consumption, worsened business environment, and layoffs/reduced employment income as potential threats to tax revenue streams.
On the expenditure side, the State is likely to be forced to pump in more stimulus funds into the real economy in coming months unless the virus' spread is quickly contained.
President Uhuru Kenyatta last month unveiled a Sh53.7 billion, eight-point economic stimulus programme, designed to tide the economy through the Covid-19 crisis.
NCBA analysts warn that such measures may increase the risk that the budget deficit could widen beyond the envisaged 7.3 percent.
