Kenya’s fiscal deficit could RISE 9.0 percent of Gross Domestic Product (GDP) equivalent to 1,000.2 billion shillings in the fiscal year 2020/21 from 7.8 percent in the current fiscal year according to the recent projections.
As the country struggles to thrive on the wheels of loans and massive borrowing, this projection may result in rising interest rates as it will need to borrow more to meet the shortfall. That is, digging one hole to fill the other.
Kenya’s debt is already moving out of hand despite the National Treasury insisting that it is “within manageable levels.” It currently stands at 10.4 trillion shillings, above the ceiling set by the Senate at 9 trillion shillings.
“To finance the fiscal deficit in the FY 2020/21, domestic borrowing is projected at 572.7 billion shillings and foreign financing at 427.5 billion shillings,” said the National Treasury.
Treasury under Ukru Yatani says it will focus its expenditure ‘prioritization policy’ aimed at ensuring equity and minimizing costs through the elimination of duplication and inefficiencies, creation of employment opportunities, and improving the general welfare of the people.
Additionally, Treasury estimates that the Kenyan economy will expand at 6.4 percent in 2021, after a historically low growth rate of 0.6 percent in 2020. However, the current taxes imposed are set to hit hard on businesses hence hinder expansion.