HIGHLIGHTS-Kenya budget for 2020/21 fiscal year
Kenya's 2020/2021 budget is currently estimated at Sh.2.733 trillion for the total expenditure and net lending with recurrent expenditure accounting for Sh1.8 trillion while development spending accounts for the balance of Sh584.9 billion.
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The following are highlights of the Kenyan government’s budget for the 2020/21 fiscal year as presented to parliament by Finance Minister Ukur Yatani.
The government’s financial year starts on July 1.
ON BORROWING PLANS:
“In the financial year 2020/2021, to cover the fiscal deficit …. will be financed through net external financing of 347 billion shillings … net financing of 493.4 billion shillings another net domestic repayment of 627 million shillings.”
ON TAX EXEMPTIONS:
“I have proposed further removal of tax exemptions through the finance bill 2020.”
ON SOVEREIGN GREEN BOND:
“The National Treasury proposes tapping into the green financing by issuing the first green sovereign bond to finance major infrastructure projects in the financial year 2020/2021. These proceeds will be directed towards green projects at the national and county levels.”
ON BUDGET DEFICIT:
“Our fiscal consolidation plan has been adversely affected by the events over the last six months. It this respect we are now targeting a fiscal deficit of 8.3% of GDP in financial year 2019/20 from the previous figure of 6.3% of GDP. In financial year 2020/2021 the fiscal deficit is targeted at 7.5% of GDP and is expected to improve to 6.1% of GDP in financial 2021/2022.”
ON TACKLING ECONOMIC CHALLENGES:
“We shall not only implement a rapid economic stimulus programme, but also lay down a firm post COVID-19 economic recovery strategy.”
“These initiatives are ultimately expected to stimulate economic activities, thereby culminating to a growth of 5.8% in 2021 and 6.5% by 2024.”
ON ECONOMIC GROWTH:
“The budget was prepared against a background of contracting global economy occasioned by the outbreak of the COVID-19 pandemic which has disrupted every aspect of human life.”
“In addition to the adverse effects of the COVID-19 pandemic, the Kenya economy is confronted by the impact of locusts and floods that have caused deaths, displacement and destruction of infrastructure across the country.”
“From these three, all sectors of the economy have been adversely affected.”
“Taking into account these shocks on the domestic economy, growth is now projected at a lower rate of 2.5% in 2020 down from 5.4% growth recorded in 2019.”
“We need to be cautious about future debt accumulation.”