Kenya’s Public Loans: Over the recent past, Kenyans have been raising concerns over the Jubilee government’s insatiable appetite for debts. Now, to add salt on injury, the government is reportedly looking to take a fresh Sh. 600 billion loan. This follows shortfalls in the revenue collected.
“Despite a pinching tax on fuel, the gap between spending and revenues has continued to increase, prompting the Treasury to revise targets for the Kenya Revenue Authority,” reports the Standard newspaper. It further adds that currently, the budget deficit has grown to Sh. 600 billion, with tax revenues expected to drop to Sh. 1.8 trillion, down from Sh. 1.9 trillion projected in the 2018/19 Budget.
“We had made projections based on what we expected KRA would collect but performance was bad, especially the last three months and so we had to adjust,” Finance Principal Secretary Kamau Thugge is quoted on the poor revenue performance that has been recorded by the Kenya Revenue Authority.
“This means that Kenya’s targeted fiscal deficit will rise to six per cent, from a targeted 5.7 per cent, which was still seen as high by the International Monetary Fund (IMF) and formed its basis to push for debt management,” says the Standard.
Pressure now shifts to KRA, whose task has been made even more difficult after Parliament threw out tax proposals, including 0.05 per cent tax on transactions above Sh. 500,000 and 0.5 per cent tax for a housing fund.
KRA has had a history of under-performing on Treasury tax targets and in May this year, Treasury had to reduce tax estimates to Sh1.415 trillion.
Kenya’s financing deficit over the past few years has been oscillating between 8.4 per cent in 2014 to 7.4 per cent in 2015, then 8.8 per cent in 2016 and last year, it stood at 6.9 per cent. The plan was to cut it to 5.7 per cent this year and then 4.3 per cent next year.