Kenya National Assembly Thursday passed the supplementary budget to the tune of Ksh 80 billion for the current financial year 2020-21.

The Budget and Appropriations Committee (BAC) recommended an overall increase of Ksh 80.7 billion (Ksh 19.1 billion in recurrent and Ksh 61.6 billion in development).

This is Ksh 5.6 billion higher than the estimates that had been published by the National Treasury.

The National Treasury has been slashed by Ksh 26.8Bn, which could be on account of either the reversal of the Ksh 26.5Bn bailout for Kenya Airways. 

State Departments for Infrastructure and Transport have been slashed by Ksh 2.8Bn and Ksh2.6Bn, respectively, while the Ministry of Water and Sanitation has been trimmed by Ksh 2.7Bn. 

On the other hand, the State Department for Planning has been re-allocated an additional Ksh 23.9Bn, which we believe is to reinstate the slash in the Constituency Development Fund. 

Other beneficiaries in the BAC recommendation report include the Ministry of Health (Ksh 7.7Bn), the State Department of Devolution (Ksh 2.5Bn) and the Ministry of Environment and Forestry (Ksh 1.2Bn).

“The result is that the revised spending to the national government in the current fiscal year will jerk up to Ksh 1.972Tn. We expect the Supplementary Appropriations Bill to be tabled shortly now that the National Assembly has approved the FY2020/21 Supplementary Budget I Estimates,” Genghis Cross-Asset Weekly Strategy.

The government is 9.6% behind its prorated borrowing target of Kshs 396.5 bn having borrowed Kshs 358.5 bn 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 Kshs 1.9 tn for FY’2020/2021, thus leading to a larger budget deficit than the projected 7.5% of GDP,” Cytonn Investments says.

NCBA Market Research says concerns continue to mount over the state of government coffers as revenues falter amidst sticky spending needs. In the eight months to February, revenues were 10.5% below the same period last year.

“The gap in revenues could widen further as the recent surge in infections push for more health care spending, especially in the absence of lockdowns. The hit on
business and consumer confidence may further dampen the revenue outlook,” they note.

“At the same time, access to international capital markets may diminish with the surge in US dollar and US treasury yields. 

Source:  National Treasury, Genghis Capital, Cytonn Investments, NCBA 

Khusoko provides market insights into Africa's business investment as well as global trends that impact East African businesses.

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