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January 20, 2019

KRA could miss revenue target by Sh300b this fi nancial year

The National Treasury. /Enos Teche
The National Treasury. /Enos Teche

Kenya Revenue Authority may miss its revenue target for 2018/19 financial year by nearly Sh300 billion if the current collection trend persists.

This is despite revising the target for this fiscal year by 5.03 per cent to Sh1.605 trillion from Sh1.69 trillion. 

The new target is contained in the Treasury’s Statement of Actual Revenues and Net Exchequer Issues published in the Kenya Gazette.

No reasons were given for the revenue readjustment. 

The International Monetary Fund last October said Kenya’s fiscal adjustment would help put the public debt ratio on a downward path. It blamed over-ambitious budgets for growing public debt.

“Adjustment efforts should focus on both expenditures and revenues to preserve space for planned growth enhancing public investment and key social programs, including the authorities’ Big Four agenda,” IMF directors said in a statement.

In October, the National Treasury attributed the downward revision in revenue targets to amendments in the Finance Act 2018 which resulted in reduction in projected revenues by Sh48.6 billion.

The taxman managed to collect Sh555.65 billion in five months to November, averaging Sh111.1 billion per month. 

This means, Sh1.33 trillion will be collected the whole year if the trend persists, falling below target that has been revised twice in the year so far.

Last fiscal year, Sh1.37 trillion was collected, missing the Sh1.415 trillion target that had also been revised twice. 

Treasury has also revised its total revenue target for the year from Sh2.629 trillion to Sh2.582 trillion, collecting a total of Sh857.281 billion in five months.

As a consequence, Rotich slashed government expenditure targets, with resurrect budget dropping to Sh931.6 billion from Sh940.7 billion set in October. It has since disbursed Sh349.1 billion, accounting for 37.5 percent in five months to November.

It has also trimmed the development budget from Sh410.9 billion to 382.3 billion; further violating the IMF’s recommendation that development must be allocated 30 per cent of total budget. 

Counties received Sh74.49 billion during the month out of Sh304.96 billion allocated. The total amount was revised from Sh314 billion. The restated amount however meets the constitutional threshold of 15 per cent allocation to the devolved units.

Kenya spent Sh254.2 billion of that amount on public debt service. It expects to repay Sh870.6 billion during the year with the first trench of Sh280 billion Eurobond issued in 2014 maturing in June.

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