The government has projected a loss of Sh172 billion in revenue with the tax incentives put in place to mitigate the effects of Covid-19.
Treasury CS Ukur Yatani on Tuesday said though they had projected a 6% GDP growth, the projection has been reviewed downwards and will likely drop to less than 3%.
Yatani on Tuesday said with the mitigative measures put in place, the government will be losing Sh60 billion per month for the next three months.
"For us to be able to manage the situation, we shall reallocate funds from the sub development projects to allow us to have a financial flow to deal with the pandemic,” he said.
Yatani was speaking when he received a Sh2 billion cheque from the Director of Public Prosecutions Noordin Haji.
He said the amount under the Coronaviris Emergency Respond Fund will go a long way in ensuring the most vulnerable in the society are supported.
“It is evident that revenues are going to shrink. Countries are now revising their growth projections downwards and Kenya is not an exception,” Yatani said.
He said the need for budget support to fight the Covid-19 pandemic has been increasing each day.
“We have been receiving outrageous proposals from the committees put in place and looking at the figures, they are far beyond our imagination,” he said.
According to the CS, the reduction of the Value Added Tax should provide relief to the citizens as prices for essential products are expected to be lowered.
He said the business community across the country should have compassion and ease the burden on citizens.
"We understand the pandemic is really hitting hard on the ordinary citizens, as the government explores the best ways to prevent its citizens from the economic shocks, those in the business sector should also try and have some understanding of the situation,” he said.
Yatani said so far Sh10 billion has been set aside to complement efforts of the Emergency Response Fund as directed by President Uhuru Kenyatta.
He said there is also an additional of Sh10 billion from the VAT refund.
The CS said despite the current situation, disbursement of funds to the counties will continue.
He said counties that have not cleared their pending bills have been advised accordingly.
"So far all the counties that have requested for the funds we are in the process of ensuring that the money is released to them in good time,” he said.
