Kenya’s Fiscal Deficit at 7.5% of GDP In Financial Year 2021-22

Kenya’s fiscal deficit for 2021-22 is being projected at 7.5 percent of the gross domestic product (GDP) for the fiscal year 2021/2022. This is down from 8.7 percent for the current fiscal year. This was from the national budget read on June 10, 2021.

Treasury Cabinet Secretary Ukur Yatani on Thursday while tabling the 3.6 trillion shilling budget said the same will decline to 3.6 percent in FY24/25. Analysts feel Ukur Yatani presented a budget that was full of assumptions and that he might be disappointed.

“This is a 5.1 percent reduction in fiscal deficit over the next four years thereby slowing the annual growth of debt,” he told Parliament. “This economic recovery program is supported by multilateral and bilateral partners by USD 2.34 billion over the next 3 years.”

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Treasury reiterated that Kenya’s public debt remains sustainable, but the debt carrying capacity has however declined. According to Yatani, the debt and Borrowing Policy and the yearly Medium-Term Debt Strategy will continue to guide fiscal deficit financing.

He stated the government’s intentions to adopt reforms to strengthen the institutional arrangement of public debt management by aligning the Public Debt Management Office’s activities with the Public Finance Management Act.

“In this respect, decisions on the day-to-day management and operations of public debt management shall be undertaken by the Public Debt Management Office to enhance efficiency, strengthen accountability and transparency.” 

The ministry has also planned a series of debt management operations to reduce cost and risk in the country’s public debt portfolio in order to strengthen the country’s debt sustainability indicators and sovereign credit rating.

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Economic growth is expected to rebound to 6.6 percent in 2021.

“The outlook in 2021 will be reinforced by the prevailing stable macroeconomic environment and the ongoing implementation of the strategic priorities of the Government under the “Big Four” Agenda and Economic Recovery Strategy.