Kenya’s total revenue by the end of September 2020 declined to KSh 378.7 Billion from KSh421.2 Billion collected in the same period last year according to a Treasury report. The revenue collection in the first three months of the fiscal year 2020/2021 fell below government’s target of KSh 428.9 billion.
Treasury attributed the weak revenue collection to underperformance in Value Added Tax, Pay As You Earn, Excise Duty, and Import Duty. Pay As You Earn in the three months to September 2020 dropped by 27% (yoy) to KSh 71.6 billion largely due to the 5% individual tax rate reduction introduced in March, as well as the many job cuts and pay cuts carried out in most Kenyan companies. Value-Added Taxes (VAT) on Domestic and Imported goods declined by 30.8% and 9.5% respectively in the period under review.
In contrast, revenue from external grants rose sharply to KSh 3.9 billion, a 39.7% increase from KSh2.8 billion received in the same period last year.
Government spending in the three months period amounted to KSh 510.4 billion, of which KSh357.1 went to recurrent expenses such as debt repayment, wages, and pensions while KSh 122 billion went to development expenses.
Kenya’s budget deficit in the three months that ended in September grew to KSh 131.7 billion compared with KSh 123.5 billion during the same period in 2019, a 6.7% (yoy) increase.