Kenya’s fiscal deficit is expected to widen to KSh 1 trillion in the fiscal year 2020/21 ending on 30th June 2021, a 25% jump from KSh 796.8 billion in the 2019/20 fiscal year according to the draft 2021 budget policy statement. A fiscal deficit occurs when the government’s spending exceeds its revenue. Kenya’s KSh 1 trillion fiscal deficit is one of the highest deficits on record.
The government is expected to spend KSh 2.878 trillion in the current fiscal year, and KSh 2.969 trillion in the 2021/22 fiscal year starting on 1st July 2021. This fiscal year, KSh 1.848 trillion will go toward recurrent expenses, KSh641.9 billion toward development projects, KSh 383 billion on county transfers, and KSh5 billion for the contingency fund.
Some of the major sectors set to receive government funds are agricultural sector, energy and infrastructure sector, health sector, education sector, governance, justice, law and order department, international affairs department, social protection department, environmental protection and natural resources department, and national security department.
Kenya expects to collect KSh 1.829 trillion total revenue in the 2020/21 fiscal year. In addition to the revenue collection, the governments aims to raise KSh 572.7 billion from the domestic debt market and KSh 427.5 billion from the international debt market to cover government expenses in the 2020/21 fiscal year. A further KSh 48.7 billion in grants is expected before the end of the fiscal year 2020/21.