Kenya Aims to Halve Its Budget Shortfall in Four Years

Kenya plans to almost halve its budget deficit in the next four years as the government implements measures to boost revenue amid pressure to fund the president’s ambitious “Big Four” development agenda.

The budget gap will shrink to 3.3% of gross domestic product in 2024 from an estimated 6.3% in the fiscal year ending in June, according to a document on the National Treasury’s website. The shortfall for the year starting July is seen at 4.9% of GDP.

Kenya is struggling to fund President Uhuru Kenyatta’s agenda to boost manufacturing, housing, farming and health care while keeping debt levels sustainable. In November, the International Monetary Fund Managing Director Kristalina Georgieva said the government should be cautious in piling debt after it amended its borrowing ceiling to allow more loans.

Authorities in the East African nation plan to improve efficiency in tax administration and increase collections that could amount to 1.8 trillion shillings ($17.8 billion) in 2020-21 compared with an earlier forecast of 1.7 trillion shillings.

The government will continue with plans to keep the fiscal deficit under control, Treasury Secretary Ukur Yatani said in the document. Nominal debt will decrease to 56.1% of GDP in the next fiscal year from 57.5% in the 12 months through June.

Kenyatta’s administration plans to strengthen its domestic debt market and boost its contribution toward funding the nation’s budget shortfalls. The gap of 569.4 billion shillings in the year beginning July will be filled with external debt of 247.3 billion shillings, while the rest will come from domestic borrowing and other local financing sources.

Kenya plans to cut what it spends as a portion of GDP to 21.7% in 2024 from an estimated 27.8% in the current fiscal year.