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Kenya missed 2021/22 budget by Sh300bn - Treasury

The country collected Sh3.05 trillion against a target of Sh3.3 trillion

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by The Star

Big-read25 July 2022 - 13:11
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In Summary


  • This hurt the country's allocations to counties and debt repayment plan
  • The country collected Sh3.05 trillion against a target of Sh3.3 trillion
Treasury CS Ukur Yatani ahead of the 2022-23 budget reading at the National Assembly on Thursday, April 7

Kenya did not meet its budget expectation for the year ended June 30 by Sh300 billion, hurting disbursement to counties and debt payment.

Latest National Treasury Statement data on Actual Revenues and Net Exchequer Issues published in the Kenya Gazette last Friday shows the country collected a total of Sh3.05 trillion against a revised budget of Sh3.3 trillion.

The country's total budget plan for the year had originally been set at Sh3.19 trillion before being increased in supplementary budgets. 

The budget deficit was despite the country exceeding its domestic revenue collections for the first time in 11 years. 

The Kenya Revenue Authority (KRA) collected Sh2.03 trillion during the financial year under review, against an original target of Sh1.88 trillion and two revised targets of Sh1.91 trillion and Sh1.97 trillion respectively. 

Even so, the exchequer missed its external borrowing plan by almost half due to the high credit costs occasioned by a strong US dollar. 

While the country had planned to borrow Sh421.2 billion during the financial year under review, it only managed Sh239.6 billion, leaving out Sh181.6 billion. 

This is largely attributed to the exchequer's decision not to go for the fifth Eurobond worth $1 billion (Sh118 billion) as planned at the tail end of the financial year.

The National Treasury Cabinet Secretary Ukur Yatani in May said Eurobonds had become expensive due to the on-going conflict between Russia and Ukraine.

He instead said the country would borrow locally to meet its budget expectations for the financial year. 

"While the country borrowed at six per cent in 2021, the rates have since doubled, making this option unfeasible. This is why Kenya is seeking cheaper bank syndicated loans,'' Yatani said.

Kenya joined other countries including Nigeria, which froze plans to float a $950 million Eurobond due to the hostile market conditions occasioned by the Russia-Ukraine conflict.

According to data from the Central Bank of Kenya (CBK), yields on the 10-year Eurobond maturing in 2024 have risen by 147 per cent in the year to date while returns on the 30-year paper maturing in 2048 are up by 34.9 per cent.

The spike in Eurobond yields is biased towards the shorter end of the yield curve pointing to an assessment of near-term risks by investors in the bonds.

The failure to meet budgetary needs saw the country go against its debt repayment schedule for the financial year by Sh109 billion.

Treasury data shows the country spend Sh1.042 trillion on a debt against a revised budget of Sh1.154 trillion. The exchequer had originally planned to spend Sh1.169 trillion on debt servicing. 

It also narrowly failed to meet its recurrent budget after spending Sh1.205 trillion against a revised target of Sh1.23 trillion. The recurrent expenditure was revised upwards from Sh1.1 trillion. 

Counties also suffered in the process after the exchequer failed to remit Sh30 billion by June 30. 

The financial statement shows the devolved units received a total Sh340.4 billion against a set budget of Sh370 billion.

Kenya has set an even more ambitious budget plan for the current financial year. The total budget for the year has expanded by 10.3 per cent to Sh3.3 trillion from an original estimate of Sh3 trillion last year.

The total revenue for the year has also been raised by 20 per cent increasing to Sh2.4 trillion from Sh2 trillion in the financial year ended June 30. 

 

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