Kenya’s National Treasury has cut the 2022–2023 fiscal year budget deficit to 4.4 per cent from an estimated 5.8 per cent in the current financial year.
“The fiscal consolidation plan targets to gradually reducing the fiscal deficit including grant from 6.2% of GDP in financial year 2021/22 to 5.8% (Ksh 824 billion) of GDP in financial year 2022/23 and 4.4% ( Ksh 718 billion) of GDP in 2023/24 and further reducing fiscal gap to 3.6% in financial year 2025/26,” Treasury Cabinet secretary Njuguna Ndung’u said on Thursday in his Budget speech.
This means that the Kenya Revenue Authority (KRA) will need to collect Ksh 380 billion more in the new fiscal year.
According to the Treasury, the deficit will be funded by borrowing Ksh 587 billion from the domestic market and Ksh 131 billion from the international market.
“The projected deficit of Ksh 718 billion will have to be met through borrowing -raising the total debt ceiling towards Ksh10 trillion. The Government is keen on changing the debt ceiling from an absolute number to a percentage of GDP. A 2 billion Eurobond is also maturing in FY 2023/23,” says PwC in its Kenya’s 2023/24 National Budget – insight and analysis.
With an estimated economic growth of 5.5 per cent for FY 2023/2024, the total expenditure is set to increase from Ksh3.38 trillion in FY 2022/2023 to Ksh 3.67 trillion, with a projected ordinary revenue increase from Ksh 2.19 trillion to Ksh 2.57 trillion.