- Government plans to borrow 500.5 billion shillings in 2016-17
- Kenya says economy on solid ground despite global headwinds
Kenya sees its budget shortfall narrowing to 6.9 percent of gross domestic product in the fiscal year beginning July 1 as it boosts revenue collection, the Finance Ministry said in a draft budget policy statement.
The deficit is forecast to narrow from 8.1 percent in the current fiscal year, the ministry said in a statement on Monday on its website. Spending is set to decline by 4.5 percent to 1.91 trillion shillings ($18.7 billion) following a projected 46.9 billion shillings revenue shortfall. It also plans to curb domestic borrowing by nearly a quarter to 168.2 billion shillings in favor of external financing, which will increase to 346.5 billion shillings from an earlier projection of 340.5 billion shillings.
The government is trying to keep spending in check after facing a slowdown last year following repeated Islamist attacks that hurt its key tourism industry. Growth is set to recover this year to 6 percent from 5.6 percent in 2015. “Kenya’s macro economic performance remains strong in the face of headwinds from the global economic slowdown,” according to the statement.
In 2016-17, President Uhuru Kenyatta’s government proposes to boost spending to 2.1 trillion shillings, or 29 percent of GDP, according to the statement. Revenue collection in East Africa’s biggest economy is expected to reach 1.5 trillion shillings from a projected 1.3 trillion shillings this year.
Treasury plans to plug a spending deficit with loans of as much as half a trillion shillings in 2016-17. It seeks to raise 310.7 billion shillings in external funding that year and tap the domestic market for the remaining amount.
The robust economic growth will be underpinned by continued investment in infrastructure, construction, mining, lower energy prices and booming agricultural output, the Treasury said.