The government is projecting a loss of Sh172 billion in revenue with the tax incentives put in place to contain the wrath of the Covid-19 pandemic.
Finance Secretary Ukur Yatani on Tuesday said the National Treasury had projected a 6% GDP growth, the projection had to be reviewed downwards and is expected to drop below 3%.
Mr. Yatani said that the measures that have been put in place to handle the pandemic will force the government to incur a Sh60 billion loss every months in the next three months.
“To manage the COVID-19 situation, we shall reallocate funds from the sub development projects to allow us to have a financial flow to deal with the pandemic,” Yatani said.
He was speaking when he received a Sh2 billion cheque from the Director of Public Prosecutions Noordin Haji. The amount will be directed to Coronavirus Emergency Fund that will be used to ensure that the most vulnerable in the society are given support.
“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.
The CS added that the budget to fight the pandemic has been ballooning everyday.
“The government has been receiving outrageous proposals from the committees put in place and looking at the figures, they are far beyond our imagination,” Yatani said.
He stated that the reduction of the VAT should should be a relief to Kenyans since it will reduce the prices of essential commodities as he pleaded with the business community to be compassionate to ease the burden on Kenyans.
“The government understands the pandemic is really hitting hard on the ordinary citizens, as it 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.
He also said that Sh10 billion has been set aside to facilitate efforts by EmerGency Response Fund as directed by President Uhuru Kenyatta.
Yatani said so far Sh10 billion has been set aside to complement efforts of the Emergency Response Fund as directed by President Uhuru Kenyatta. There is also another Sh10 billion from the VAT refund.
Adding that the disbursement of funds will continue despite challenging situations, the CS called on counties with pending bills to clear them.