KRA Collected Ksh 1.9 Trillion By End Of March

Total revenue collected by the Kenya Revenue Authority (KRA) as of the end of March 2021 amounted to 1.9 trillion shillings, equivalent to 63.6 percent of the revised target of 2.9 trillion shillings.

Cumulatively, tax revenues amounted to 1.0 trillion shillings, equivalent to 70.6 percent of the target of 1.5 trillion shillings. The opening balance includes 21.4 billion shillings held in the IMF Rapid Credit Facility account.

The total expenditure amounted to 1.9 trillion shillings, equivalent to 63.4 percent of the revised budget of 2.9 trillion shillings.

The net disbursements to recurrent and development expenditures came in at 718.5 billion shillings and 184.5 billion shillings, which is 66.3 and 45.9 percent of their respective FY’2020/2021 targets and lower than the pro-rated projected output of 75.0 percent.

Consolidated Fund Services (CFS) Exchequer issues lagged behind the revised target of 1.1 trillion shillings after amounting to  0.7 trillion shillings equivalent to 70.9 percent of the target.

The cumulative public debt servicing cost amounted to 699.5 billion shillings which are 73.0 percent of the revised estimates of 958.4 billion shillings.

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Total Borrowings as of the end of March 2021 amounted to 0.7 trillion shillings, equivalent to 72.9 percent of the revised target of 1.0 trillion shillings.

The cumulative domestic borrowing amounted to 853.8 billion shillings comprising of adjusted Net domestic borrowings of 491.9 billion shillings and Internal Debt Redemptions (Roll-overs) of 362.0 billion shillings.

On the other hand, external loans and grants amounted to 65.8 trillion shillings, which is 84.3 percent behind its target of 418.8 trillion shillings.

The revenue underperformance was expected given the ravaging effects of the COVID-19 pandemic on the economy for most parts of 2020.

However, the recent reversal of the tax incentive introduced earlier in 2020 will help improve tax revenue, as seen by reported revenue out-performances in the first three months of 2021.

“In our view, we expect the government to plug in the 59.2 billion shillings deficit by turning to the less expensive multilateral institutions and commercial loans, as recently seen by the IMF credit facility of 255.9 billion shillings,” said Cytonn Investments.

Rates in the fixed income market have remained relatively stable as the government rejects expensive bids. The government is 14.7 percent ahead of its domestic borrowing target, having borrowed Kshs 505.1 bn against a pro-rated target of 440.5 billion shillings for the financial year 2021/2021.

“In our view, due to the current subdued economic performance brought about by the effects of the COVID-19 pandemic, the government will record a shortfall in revenue collection with the target having been set at 1.9 trillion shillings for FY’2020/2021, thus leading to a larger budget deficit than the projected 7.5 percent of GDP,” added Cytonn.

The high deficit and the lower credit rating will mean that the government might be forced to borrow more from the domestic market which will ultimately create uncertainty in the interest rate environment.