EXCHEQUER

Treasury to spend more than budget as revenue collection dips

In Summary

• While the budget is expanding, domestic revenue collection is dwindling.

• Recurrent expenditure  is expected to account for 78.9 per cent of the budget.

Treasury cabinet Secretary Henry Rotich with the budget briefcase outside Treasury/FILE
Treasury cabinet Secretary Henry Rotich with the budget briefcase outside Treasury/FILE

Kenya will spend at least Sh6 billion more than it budgeted for this financial year.

The 2019 Economic Survey unveiled last week by Treasury CS Henry Rotich shows that the country is expected to spend Sh3.03 trillion compared to Sh2.97 trillion, despite being behind in revenue collection.

"In 2018/19, overall expenditure by the National Government is expected to grow by 17.8 per cent to Sh3.03 billion. In the review period, recurrent and development expenditure is estimated at Sh2.39 trillion and Sh641.5 billion, respectively," the survey revealed.

Recurrent expenditure  is expected to account for 78.9 per cent of the budget, leaving only 21.1 per cent for development, 8.9 per cent below the 30 per cent threshold set the International Monetary Fund (IMF).

The additional budget slightly pushes up the country’s budget deficit targeted at 5.7 per cent this year down from 7.2 per cent in the last financial year.

Kenya was to finance the deficit with net external financing amounting to Sh297 billion, an equivalent of three per cent of the country’s GDP and domestic borrowing of Sh271.9 billion.

The additional expenditure therefore means the government will have to borrow more, despite the growing concern over the surging public debt that has since hit Sh5.4 trillion, according to latest update by CBK.

Latest data by Kenya National Bureau of Statistics shows total debt was at Sh4.5 trillion as at the end of June 2018, meaning the government has accumulated close to Sh1 trillion in less than one year.

This year, the government expected to spend a total of Sh856.6 billion to service both domestic and external loans.

While the budget is expanding, domestic revenue collection is dwindling.

In March, KRA commissioner general John Njiraini told the Parliamentary Finance Committee that the agency was behind collection schedule by Sh55 billion and projects to miss the target by up to Sh110 billion.

This despite Treasury revising KRA’s target downwards by five per cent in September to Sh1.605 trillion from Sh1.69 trillion.

The government managed to collect Sh1.37 trillion in 2017/18 against a target of Sh1.415 trillion.

Treasury had anticipated a total revenue growth of 20.8 per cent to Sh1.886 trillion this year of which Sh1.838 was to be ordinary revenue. The tax revenue category was expected at Sh1.6 trillion, accounting for 88.2 per cent.

County governments are also expected to exceed their budget by Sh36.7 billion against expected revenue of Sh422.8 billion.

This year, transfers from National Government to county governments inclusive of conditional grants, is estimated to grow by 7.8 per cent to Sh372.7 billion.