As June 30 draws nearer, the final day of FY 2019/20, there is an expectation that Treasury will miss its revenue targets. Parliamentary Budget Office in Unpacking the Estimates of Revenue and Expenditure for 2020/2021 and the medium-term reveals that revenue projections for FY 2019/20 has been revised twice: Initial (Ksh2,115.8Trillion), Supplementary Estimates 1 (Ksh2,084.2Trillion), and Supplementary Estimates 11 (Ksh1,893.9Trillion). As of April 2020, cumulative ordinary revenue collection hit Ksh1.346 Trillion which is 81.9% of the revised Ksh1,643.4Trillion revised ordinary revenue collection target in FY2019/20.
COVID19 lockdown has grounded business activities with analysts expecting job losses, anemic private sector environment – from the pandemic which will have a negative knock-on consumption, investment, and trade. COVID19 tax measures such as reduction of turnover tax from 3% to 1%, VAT from 16% to 14%, and corporate tax from 30% to 25% are likely to impact revenues.
According to Genghis Capital, revenues in April amounted to Ksh120.1 billion implying that ordinary revenue should average Ksh148.6 billion in May and June. This seems unrealistic due to the disruption of business operations in the two months.
The National Treasury projects that ordinary revenue will decline from Kshs. 1,643.4 billion (16.1% of GDP) billion in 2019/20 (revised estimates II) to Kshs. 1,621.4 billion (14.4% of GDP) in 2020/21.