Kenya’s fiscal deficit for 2021-22 is being projected at 7.5 per cent of the gross domestic product (GDP) for the fiscal year 21/22.
This is from 8.7 per cent in the current fiscal year.
Treasury Cabinet Secretary Ukur Yatani on Thursday while tabling the KSh3.6 trillion budget said the same will decline to 3.6 per cent in FY24/25.
“This is a 5.1 per cent 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,” he added.
The program prioritises health and social expenditures targeted at:
First, enhancing our ability to respond to the COVID19 Pandemic; Second, reducing debt vulnerabilities through a revenue-driven fiscal consolidation with a view to stabilizing debt to GDP ratio over the medium term; Third, implementing targeted policy, legal and institutional reforms while at the same time addressing vulnerabilities in the State-Owned Enterprises worsened by the COVID-19 Pandemic; Fourth, strengthening the monetary policy framework and financial stability.
Treasury reiterated that Kenya’s public debt remains sustainable, but the debt carrying capacity has however
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.
Economic growth is expected to rebound to 6.6 per cent 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.
Weather conditions are expected to be favourable supporting agricultural output. As a result, the export of goods and services will expand as global demand normalises,” said Yatani.
Over the medium term, Treasury said the economy is expected to remain resilient and grow at a rate above 6.1 per cent.