The Kenyan Treasury has projected an overall budget deficit of 7.2 percent for the current fiscal year from 8.9 percent of its gross domestic product according to Draft 2018 Budget Policy Statement.
“The deficit, inclusive of grants, is therefore projected at Ksh 620.8 billion (equivalent to 7.2 percent of GDP). Borrowing from the domestic market is projected at Ksh 293.8 billion and external borrowing at Ksh. 323.2 billion,” said the National Treasury.
Further, the deficit is expected to drop to 6.0 percent of GDP in the 2018/19 (July-June) financial year. “The overall fiscal deficit inclusive of grants is, therefore, projected to decline from 8.9 percent of GDP in FY 2016/17 to 7.2 percent of GDP in FY 2017/18, 6.0 percent in FY 2018/19 and further to 3.0 percent of GDP by FY 2021/22.”
This excludes expenditures related to SGR, the deficit declines from 7.5 percent of GDP in FY 2016/17 to 6.5 percent of GDP in FY 2017/18 and 2.5 of GDP by FY 2021/22.
“The lower deficit reflects the projected completion of key infrastructural projects being implemented by the Government, enhanced revenue collection and prudent public spending.”
Treasury noted that the Implementation of the FY 2017/18 budget is on course although ‘performance is lagging behind targets’.
“In the first five months of the year, revenues collection have consistently lagged behind targets due to the under performance of the main revenue tax heads. On the other hand, there has been elevated expenditures pressures as a result of the adverse spillover effects of the prolonged drought, the repeat of the Presidential Election and salary awards for Universities Staff and Nurses.”
On the other hand, preparation of the 2018/19 national budget is in progress after the National Treasury invited members of the public to send proposals on the economic policy measures that the Treasury Cabinet Secretary could consider when preparing the budget.
The National Treasury principal secretary Kamau Thugge invited institutions, the private sector, non-governmental organisations and individuals to submit proposals that the government can embrace to accelerate industrialisation and further transform the lives of Kenyans.
In his final term, President Uhuru Kenyatta has prioritised the “big four” agenda that he will undertake in his second term in office to spur faster growth.
“The proposals should take into account measures that will enhance realisation of the “The Big Four” agenda.”
Henry Rotich, the Treasury CS, says “The Big Four” Plan targets to:
i.Support value addition and raise the manufacturing sector’s share to GDP to 15 percent by 2022. This will accelerate economic growth, create jobs and reduce poverty;
ii. Focus on initiatives that guarantee food security and nutrition to all Kenyans by 2022 through expansion of food production and supply, reduction of food prices to ensure affordability and support value addition in the food processing value chain;
iii. Provide Universal Health Coverage thereby guaranteeing quality and affordable healthcare to all Kenyans; and,
iv. Provide at least five hundred thousand (500,000) affordable new houses to Kenyans by 2022, and thereby improve the living conditions for Kenyans.
The budget policy statement (BPS) is a Government policy document that sets out the broad strategic priorities and policy goals that will guide the national government and the County Governments in preparing their budgets both for the following financial year and over the medium term.