This archive report was first published on 12 June 2020.
Kenya's Sh3.2trn Budget: A Lifeline for the Economy? ¶
On June 12, 2020, Treasury Secretary Ukur Yatani presented the government's Sh3.2 trillion budget for the upcoming fiscal year, a 20.8 percent increase from the current year's Sh2.6 trillion.
The budget aims to counter the contractionary impact of the Covid-19 pandemic, which has delivered job cuts and unpaid leave to many Kenyans. To achieve this, the government has opted to keep its budget free of taxes on basic items, cushioning households hit by the pandemic.
However, the Treasury has eliminated tax reliefs attached to goods consumed by the rich, such as hiring helicopters and purchasing aeroplanes. This move is expected to add Sh38.9 billion to the Kenya Revenue Authority's collection.
Increased spending on infrastructure, energy projects, water and sanitation, and health will be key drivers of economic growth. The government will increase spending on infrastructure by Sh64.8 billion to Sh189.5 billion, making it one of the biggest expenditure items.
Spending on energy projects will rise by Sh52 billion to Sh72.4 billion, water and sanitation to Sh77.7 billion from Sh34.8 billion, and health to Sh111.7 billion, an increase of Sh33.3 billion.
According to the National Treasury, the GDP will grow at a slower 2.5 percent in the upcoming financial year and rebound to 5.8 percent in the subsequent year.
Mr. Yatani expressed confidence that the measures outlined in the budget will create more jobs and transform the lives of Kenyans, adding that Kenya will fare relatively better compared to other countries staring at zero growth or recession.
