Treasury to table Kenya’s biggest ever budget at Ksh.3.6T
Published on: April 30, 2021 03:12 (EAT)
On the afternoon of June 10, later this year, National Treasury Cabinet Secretary Ukur Yatani will negotiate the short distance between the Treasury building and Parliament to present Kenya’s biggest budget ever at Ksh.3.6 trillion. On Thursday, the Planning Minister presented the final budget estimates (2021/22) medium term budget alongside the 2021 Finance bill to Parliament for consideration. The spending package to be deliberated by Members of Parliament (MPs) in the run up to June’s budget statement comprises of a new Ksh.26.6 billion post COVID-19 recovery economic stimulus program (PC-ESP). “In preparing the estimates we have been very alive to the current challenges of the ongoing pandemic while ensuring that we continue on a steady path of economic recovery,” CS Ukur Yatani stated. Under the proposed budget whose finality will be preceded by scrutiny from the National Assembly Budget and Appropriation Committee (BAC), the Executive, Parliament and the Judiciary has been allocated Ksh.1.879 trillion, Ksh.37 billion and Ksh.17 billion respectively. County governments are meanwhile expected to share out Ksh.370 billion. In financing the widened spending, the National Treasury is expected to raise new taxes through the amending of the different acts including the Income Tax Act, the VAT Act, the Exercise Duty Act and the Tax Procedures Act. Other Acts targeted for amendments include the Miscellaneous Fees and and Levies Act, the Capital Markets Act, the Central Depositories Act, the Kenya Revenue Act, the Insurance Act and the Retirement Benefits Act. The National Treasury is however seeking to incentive the purchase of crucial medical equipment. “We are proposing to introduce VAT exemptions on ventilators, decongestants and supplements in order to boost the health sector by lowering costs, while also supporting youth employment by proposing tax deductions for employers that engage Technical and Vocational Education and Training (TVET) graduates as apprentices,” added CS Yatani. “We are also proposing several amendments to enhance tax administration and dispute resolution operations. These proposals alongside others contained in the Finance Bill will help create the legal and policy framework to achieve our medium-term budget goals.” Financing Highlights While Kenya has plans to spend in excess of Ksh.3.6 trillion, only Ksh.2.038 trillion will be proceeds of government revenues including Ksh.1.776 trillion in taxes. This will leave a funding deficit of nearly Ksh.2 trillion with grants only filling Ksh.62 billion of the budget hole. Kenya is subsequently expected to borrow Ksh.952.9 billion to plug the remaining deficit to include the financing of capital projects and the payment of interest on debt. This sum excludes new loans taken to retire old ones. Among the loans sort include Ksh.57.6 billion representing the second disbursement from the recent Ksh.255 billion IMF facility and Ksh.74.3 billion from the World Bank. Kenya will also seek out Ksh.14.3 billion in new borrowing to support COVID-19 vaccine purchase efforts.