Public debt has hit a new record Sh3.566 trillion, signaling a continued heavy borrowing by the national government to bridge its budget deficit for the 2016-17 financial year.
Latest data from the National Treasury shows gross domestic debt stock increased by 33.6 per cent to Sh1.854 trillion as at end of September 2016, compared to Sh1.388 trillion in a similar period last year.
The total external debt stock, including the international sovereign bond stood at Sh1.712 trillion at the same period, pointing to more domestic borrowing by the government.
This comes even as the Kenya Revenue Authority missed its quarter one target by Sh14.4 billion, despite a strong performance in July and August.
In the two months, the taxman collected Sh178.20 billion, Sh25.47 billion more than the Sh152.73 billion collected in the same period of the 2015-16 financial year.
Cumulative revenue collection including Appropriations in Aid (income that a government department is authorised to retain rather than surrender to the Consolidated Fund) from July through September 2016 amounted to Sh313.6 billion (equivalent to 4.2 per cent of GDP). This is against a target of Sh328.0 billion, 4.4 per cent of GDP.
“This represented an underperformance of Sh14.4 billion mainly due to shortfalls in income tax (Pay As You Earn, A-I-A collection, value added tax (imports) and import duty,” says Treasury CS Henry Rotich in the quarterly economic and budgetary review for the period ending September 30.
The Treasury has set a target of Sh1.37 trillion in ordinary revenues for KRA this financial year, which is Sh160 billion more than the Sh1.21 trillion collected in the fiscal year ended June 30.
The target comprises Sh1.33 trillion in tax revenues, and Sh44.38 billion in non-tax revenues.
The cumulative expenditure and net lending, inclusive of transfers to county governments for the period ending September 30, amounted to Sh387.6 billion which was Sh139.3 billion below Sh526.9 billion target.
The Treasury has attributed the shortfall to “low absorption levels in operations and maintenance, and wages and salaries for the national government”.
Rotich, however, maintained that the economy remained resilient in 2016 with a growth of 6.2 per cent in the second quarter of 2016, compared to a growth of 5.9 per cent in the first quarter of 2016. This was a further improvement from the 5.6 per cent growth in 2015.