Kenya’s National Treasury is optimistic that the budget deficit will contract to 7.5% of the GDP in the fiscal year 2021/22, which starts on 1st July 2021. The deficit currently stands at 8.7% of the GDP.
According to a statement from the Treasury, it plans to narrow the budget gap by raising revenue collection, reducing wastage and inefficiencies, and ring-fencing development spending.
The government agency predicts that the economy will expand by 7% in 2021, supported by ‘the resumption of international trade, investments in big four agenda projects, stable inflation and foreign exchange rates, and increased lending to the private sector’.
According to the National Treasury’s statement, Kenya will use $750 million, funds from the World Bank (development policy operation loan III), to deliver inclusive growth. The funds will go toward increasing electricity connections throughout the country, promoting green energy, strengthening the health and education sectors, strengthening debt management and promoting transparency in government spending.
Treasury also notes that Kenya is seeking an extension to the Debt Service Suspension Initiative (DSSI) to June 2022, after it was granted a six month suspension of principal and interest payments from January 2021 to June 2021 by bilateral creditors.