Unpacking Ukur Yatani’s Budget Estimates To Parliament

The 2021 Budget estimates point to a 5.6 percent increase of the budget, to 3.1 trillion shillings from 2.9 trillion shillings in the FY’ 2020/21 supplementary budget.

Recurrent expenditure is set to increase by 10.0 percent to 2.0 trillion shillings, from 1.8 trillion shillings as per the supplementary budget.

The development expenditure is projected to decline by 5.1 to 619.5 billion shillings from 653.0 billion shillings as per the FY’2020/21 supplementary budget.

Under recurrent expenditures, ministerial recurrent expenditures increased by 4.8 percent to 1,321.7 billion shillings, from 1,261.0 billion shillings.

The interest payment and pension increased by 21.5 percent to 697.5 billion shillings from 574.1 billion shillings in the FY2020/21 supplementary budget.

The budget deficit is projected to decline to 952.9 billion shillings (7.7 percent of GDP) from the projected 970.9 billion shillings (8.7 percent of GDP) in the FY’2020/21 supplementary budget.

Revenue is projected to increase by 10.3 percent to 2.0 trillion shillings, from 1.9 trillion shillings in the FY’2020/21 supplementary budget, with measures already in place to work towards increasing the amount of revenue collected in the next fiscal year.

Total borrowing is expected to decline by 1.9 percent to 952.9 billion shillings from 970.9 billion shillings as per the FY’2020/21 supplementary budget.

Debt financing of the 2021/22 budget is estimated to consist of 30.4% foreign debt and 69.6% domestic debt, from 28.7% foreign and 71.3% domestic as per the FY’2020/21 supplementary budget.

Similar to governments across the world, the FY’2021/2022 budget estimates point to an expansionary budget in a bid to steer the country out of the pandemic-driven economic downturn.

The budget is however hinged on meeting the revenue collection targets, expected to be boosted by the relaxation of the tax cushions that had been implemented during the peak of the pandemic last year.

This premise however ought to be a factor of economic recovery which is still uncertain given the uncertainty surrounding the persistence of the pandemic.

The fiscal deficit is estimated to reduce to 7.7 percent of GDP, mainly as a result of an expected decline in recurrent expenditure and an improvement in revenues.