This archive report was first published on 27 June 2020.
Kenya's tax revenue has hit a five-year low, with the government collecting Sh90 billion in May 2020, a significant drop from the Sh134 billion collected in May 2019. According to data from the National Treasury published in the Kenya Gazette, this decline is attributed to the negative effects of the Covid-19 pandemic on the economy.
As of the end of May, the Kenya Revenue Authority had collected Sh1.33 trillion, leaving a shortfall of Sh130 billion to reach its revised target of Sh1.49 trillion by the end of the current financial year on June 30, 2020.
Despite the economic challenges, Central Bank of Kenya Governor Patrick Njoroge expressed optimism that the Kenyan economy would bounce back in May after a poor period in April. The government had implemented stringent containment measures to stop the spread of the coronavirus, which had devastating effects on the economy.
President Uhuru Kenyatta had directed that consumers be offered tax reliefs to help them absorb the shocks of the pandemic. However, this move may have resulted in the National Treasury forgoing some taxes.
The Central Bank's Monetary Policy Committee had projected that the gross domestic product (GDP) in the second quarter would decline due to the adverse economic impact caused by the virus.
Thousands of businesses have closed shop, leaving millions without a source of livelihood as the government continues to implement social distance rules. The country had borrowed Sh717.2 billion by May, with more than half of it being net borrowings from the domestic market.
