Kenya to borrow US$3.2 billion to fill budget deficit

Close-up of a Calculator and Pen on a Financial Newspaper. Blue-toned.

Kenya projects to borrow 331 billion shillings (3.2 billion U.S. dollars), an equivalent of 3.1 percent of the gross domestic product (GDP) from external sources in the financial year 2019/2020 to finance its budget deficit, the National Treasury said on Thursday.

Some 2.9 billion dollars will also be borrowed domestically, said Treasury as it also cut the east African nation’s revenue projections for the financial year 2019/2020 following challenges in the fiscal year 2018/2019.

The institution noted that it had revised revenue projections for 2019/2020 financial to 20.3 billion dollars, taking into account a lower projection base on account of 1.21 billion dollars shortfall in financial year 2018/2019.

“Revenues for the financial year 2019/2020 are, therefore, projected at 20.3 billion dollars or 19.2 percent of gross domestic product,” said Treasury in the 2019 Budget Review and Outlook Paper.

Similarly, expenditure projections for fiscal year 2019/2020 were revised downwards to accommodate the weak revenue performance.

“This was done through trade-offs and reallocations of the existing budgetary provisions supported by austerity measures instituted on less productive areas of spending across the government. This has resulted in a reduction of the original budget by 4.5 million dollars or 2.1 percent of the original budget,” said Treasury.

Total expenditure during the financial year is projected at 22.7 billion dollars or 26.3 percent of GDP.

“The deficit is therefore projected at 6.3 billion dollars, an equivalent to 5.9 percent of GDP. Excluding standard gauge railway, the deficit amounts to 6 billion dollars or 5.6 percent of GDP,” said Treasury. Enditem

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