This archive report was first published on 11 June 2020.
Kenya's FY 2020/2021 budget, totaling Ksh2.7 trillion, has been met with skepticism by analysts who claim it does not reflect the COVID-19 reality the country is facing.
According to the budget, the country is expected to pay its creditors Ksh904.7 billion, creating a deficit of Ksh823 billion, which will be plugged by more loans.
Treasury Cabinet Secretary Ukur Yatani has stated that while the government might get some short-term relief on its credit facilities, the country will still have to service its debt obligations in the near future.
The budget features a recurrent expenditure headline of Ksh 1.8 trillion, Ksh549.7 billion as development expenditure, Ksh53.7 billion COVID-19 stimulus package, and a Ksh369.9 billion allocation to the counties.
However, the counties are penciled in to receive only Ksh316.5 billion as equitable share from the national government, with the remaining Ksh53.4 billion being earmarked for conditional grants and loans.
Philip Muema, Managing Partner at Andersen Tax, has expressed concerns that the country is punching above its weight and that the budget does not reflect the reality of the COVID-19 pandemic.
“We started living beyond our means during the second term of the Jubilee administration, that’s the reality. If you look at the Ksh2.7 trillion, we already grappling with a Ksh6.3 trillion debt, 50% of which is external. We have already stretched the tax measures so thin that we cannot stretch them any further,” said Muema.
“Numbers don’t lie, KRA is expected to collect Ksh1.6 trillion, where will the deficit come from? It means we will have to borrow,” added Muema.
