This archive report was first published on 27 July 2019.
KRA Misses Tax Target, Treasury Turns to Debt ¶
According to the latest Treasury statement on revenues and expenditures published in the Kenya Gazette on July 27, 2019, the Kenya Revenue Authority (KRA) missed its tax target by Sh250 billion, collecting Sh1.44 trillion against its original target of Sh1.69 trillion.
Even after the National Treasury revised the target twice to Sh1.51 trillion in May, the taxman still fell short, with some experts attributing the failure to 'over-ambitious targets' by the government.
As a result, the government was forced to borrow more to plug the deficit, defeating President Uhuru Kenyatta's much-hyped austerity measures.
While tax revenues grew by 10 per cent from Sh1.31 trillion collected during the 2017/18 fiscal year, total expenditure grew even faster by 24 per cent.
The National Treasury borrowed a massive Sh891 billion during the period under review, with the Central Bank of Kenya Governor Patrick Njoroge putting the fiscal deficit at 7.4 per cent of the Gross Domestic Product (GDP).
The Treasury estimated the fiscal deficit for 2018/19 at 6.8 per cent.
Among the debt incurred by Kenya this year includes the Sh210 billion Eurobond, part of which was used to refinance another Sh78 billion Eurobond that matured in May.
The Treasury also took Sh125 billion medium-term syndicated loans between January and March to retire other short-term foreign loans.
Kenya also received Sh75.9 billion from the World Bank, which would be used mainly on support for agriculture and housing, raising the stock of commercial loans accumulated by June 2019 to Sh362.6 billion.
The war on fake products might have cost the government some income, after taxes on imported goods under-performed by the end of May.
Official data showed that the taxman collected Sh97 billion in import duty in the first 11 months of 2018/19 fiscal year, falling far below its June target of Sh135 billion.
President Uhuru Kenyatta, besides freezing all new projects until ongoing ones are completed, has introduced a raft of austerity measures targeting civil servants.
As a result, the Treasury froze further recruitment of civil servants, except for key technical staff, security personnel, teachers and health workers.
The government will also not extend the service of thousands of civil servants set to retire after attaining the age of 60.
Moreover, the Treasury announced plans to undertake another purge on the Government payroll to weed out ghost workers.
For civil servants who want to travel in and outside the country, the Treasury proposed the use of an electronic card system.
Technology will also be used in the management of fleet to improve efficiency and cut costs, with the Treasury proposing the use of fuel cards in government departments.
To deal with procurement fraud, the Treasury proposed an electronic end-to-end solution on all procurement processes.
