More Borrowing To Finance The Budget 2020/2021

Kenyans should prepare for more debts as the government plans to borrow both locally and internationally to finance yet another seemingly overambitious budget presented to the National Assembly by National Treasury Ukur Yattani.

The 2.73 trillion shilling budget has already been described by Members of Parliament as being overambitious and not addressing the real issues such as Covid-19, the health sector, and how to shield businesses from collapsing as a result of Covid-19.

According to the budget, the current budget falls short by 823.2 billion shillings that will need to be filled through borrowing from both the international community and local companies.

The Kenya Revenue Authority (KRA) says that revenue for the year will drop to 1.62 trillion shillings due to a drop in tax receipts and reduced business activities. The total revenue according to the Treasury is likely to close the financial year at 1.87 trillion shillings.

Domestically, the National Treasury plans to borrow at least 486.2 billion shillings with the remaining being borrowed externally. The Treasury has also lined up 152 billion shillings in program loans including 150 billion shillings from the World Bank Development Policy.

Project and concessional loans are meanwhile expected at 241.6 billion shillings and 124.1 billion shillings respectively with Treasury aiming for a minimal 6.2 billion shillings in external commercial loans in line with its aim for cheap external debt.

The total budget has been estimated at 2.73 trillion shillings. This included the total expenditure and net lending for the 2020/2021 financial year.

The lion’s share of the current budget will go to current expenditure. Current expenditure will swallow a whopping 1.81 trillion shillings for the financial year.

READ: National Treasury Disburses 40 Billion Shillings To Fight Covid-19

Expenditure on developments, including those funded by foreigners, as well as funds availed for the counties is estimated at 584.9 billion shillings.

The National Treasury is also planning to set aside a total of 57.74 billion shillings for the post-Covid-19 economic stimulus program. The funds are expected to revive the economy and shield it against the shocks of Covid-19.