This archive report was first published on 22 May 2020.
As the country grapples with the COVID-19 pandemic, the Treasury is facing a significant revenue shortfall. According to an analysis by tax and financial advisory firm Deloitte, the revenues are projected to fall by Sh70.1 billion ($658 million) during the period between April and June.
The main cause of the reduction is the onset and spread of COVID-19, which has necessitated a partial lockdown with a significant fall in economic activity. This has resulted in a projected 1.0 percent gross domestic product for this year, down from the pre-COVID-19 forecast of 5.7 percent.
Deloitte projects that the value of imports, one of the largest sources of tax revenues, will decline by 3.1 percent or Sh58.06 billion ($545 million). Imports from China, which was hard-hit by the virus, are expected to fall by 36.6 percent.
Exports, which do not bring a significant amount of taxes, are also expected to decline. The total revenue shortfall is projected to reach Sh208.5 billion before considering any shortfall or surplus from the January-March period.
“[We project] $658 million drop in revenue collections in the remaining three months to the 2019/20 fiscal year-end,” says the Deloitte report.
