The State will reduce its spending in the financial year starting in July to 23.6 % of Gross Domestic Product (GDP) from 26.0 % in the current fiscal year. The National Treasury said in its budget policy statement.
Belt-tightening measures are aimed at helping the Government meet its target to reduce the fiscal deficit for the period to 4.9% of GDP, down from 6.3 per cent for this fiscal year.
The Treasury intends to borrow Sh222.9 billion locally to seal the budget gap and acquire another Sh345.1 billion from external sources.
President Uhuru Kenyatta’s administration has been criticized by Kenyans for borrowing heavily since taking over power in 2013. The same administration was forced to raise its borrowing ceiling last year after it breached initial targets. Kenya’s fiscal deficit, which peaked at 9.1 % of GDP in the 2016/17 financial year, has been exacerbated too much spending on infrastructure.
Fiscal gaps have been worsened by the consistent failure by the Kenya Revenue Authority to meet lofty revenue collection targets.
