Fiscal Deficit Revised Upwards Estimated at 8.20% of GDP in 2021-22

Kenya’s fiscal deficit has been revised to an estimated 8.20 per cent from 7.40 per cent of gross domestic product (GDP) in 2021-22, according to the draft Budget Policy Statement (BPS) 2022.

Revenue collection is estimated to rise by 18 per cent in the fiscal year 2022/23 equivalent to KSh 2,405 billion from the projected KSh 2,036 billion in 2021/22.

“In the FY 2022/23 revenue collection including Appropriation-in-Aid (A.i.A) is projected to increase to Ksh 2,405.3 billion (17.2 per cent of GDP) up from the projected Ksh 2,036.1 billion (16.3 per cent of GDP) in the FY 2021/22. Ordinary revenues will amount to Ksh 2,141.6 billion (15.3 per cent of GDP) in FY 2022/23 from the estimated Ksh 1800.0 billion (14.4 per cent of GDP) in FY 2021/22,” the BPS statement read.

The deficit will be funded from external sources, Ksh 412.50 billion, up 52.10 per cent from the FY 2021/2022 budgeted estimate.

Domestic borrowing (net) is projected to decline by 6.33 per cent to Ksh 616.80 billion.

“Based on the revised projections, the government has thus far borrowed about 51 per cent (Ksh 313 billion) of its local debt target for the year. This could slow down appetite in the latter half of the fiscal cycle, stabilizing the curve,” NCBA Market Research Analysts note.

The Parliamentary Budget Office (PBO) has estimated the total expenditure and net lending for the next fiscal year at KSh. 3.298 trillion, a 23.6 per cent decline from the projected KShs 3,154.3 billion in the FY 2021/22 budget.

This comprises recurrent KShs 2,174.9 billion and the development of KShs 712.0 billion.