Treasury Falls Short of KES 114.03 Billion in Revenue Collection

Ordinary revenue at the half-mark point (as at December 2018) of FY2018/19 hit 722.28 billion shillings with 681.04 billion shillings from tax income and 41.24 billion shillings from non-tax income.

On a pro-rated basis, this represents a shortfall of 114.03 billion shillings which has been attributed to revenue rationalization in the prolonged legislative budget process in the current fiscal year.

Recurrent expenditure in the review period hit 415.32 billion shillings, representing an absorption rate of 44.58 percent.

Absorption of development funds remains dire hitting 116.94 billion shillings, a 30.58 percent absorption rate – which was triggered by the austerity measures on new development projects.

Net domestic borrowing underwhelmed at 58.58 billion shillings –against a pro-rated 139.50 billion shillings- as at December 2018, which propelled the 2-year bond that was issued in the month to rev up its target.

Media reports also indicate that National Treasury is eyeing USD 2.5 billion in the international debt market to boost its net foreign borrowing quantum.

The underperformance in revenue collection cements the argument for another Supplementary Budget II to trim revenue target in order to meet the fiscal deficit target of 6.30 performance in the financial year.

Secondary Market Turnover

Secondary market turnover edged up slightly to 1.79 billion shillings in Friday’s session bolstered by trades on the medium-to long-end of the yield curve.

Liquidity remains high in the market which has been attributed to high T-Bill and repo maturities coupled with the cash spillover from late last year owing to banks’ tradition to hold cash positions as they enter a new calendar year.

The high liquidity propped uptake of the 2-year bond and T-Bill weekly auctions in the year. CBK came in on Friday seeking to mop up 12 billion in the 7-day repo.

The Kenyan shilling closed the week at a three-month high of 100.75 against the dollar attributed to foreign inflows.

Equities

Equities closed the week in the gain territory, trading higher during Friday’s session compared to the previous session with most activity on the usual index counters and additionally, Centum.

“We saw increased trading in EABL as was expected following its results release where it announced an increase in the dividend in addition to a 25 percent increase in EPS,” said analysts from Genghis Capital.

The counter is expected to remain active in today’s session as the counter is still attractive to value investors. “We anticipate sustained foreign dominance in the market with an overall selling sentiment especially on the index counters,” they added.