Business / Economy
Tuesday, 07 Jun 2016 08:54 EATnewsdesk@kenyafreepress.com
Henry Rotich, the cabinet secretary for finance, will present today a Sh2.3 trillion budget for the 2016/2017 financial year.
Recurrent expenditure will hit Sh850.3 billion and development expenditure at Sh809.0 billion, representing 11.5 per cent and 10.9 per cent of the GDP.
The budget is estimated to be 11.2 per cent higher than Sh2.0 trillion that was presented during the 2015/2016 financial year.
Sh311.0 billion will be paid as interest payment and pension, while Sh7.1 billion will paid as the net lending and contingencies funds. The rest Sh284.8 billion will be paid to county governments.
Budget estimates show that the recurrent expenditure will decline to 11.5 per cent of GDP from 12.2 per cent in 2015/16, an indication that the government is focusing on cutting down the portion of expenditure.
Domestic tax collection is expected to generate about Sh1.4 trillion – which is 18.6 per cent of GDP (18.0 per cent of GDP in 2015), an increment which will be achieved by broadening the tax base and improving revenue administration through simplified and modernized VAT legislation.
For the 2015/2016 financial year, this is estimated to have been at Sh1.2 billion compared to the budgeted amount of Sh1.3 trillion.
During the period, the budget deficit will reduce to 9.3 per cent of GDP from 10.1 per cent of GDP, amounting to Sh689.1 billion. This deficit is expected to be funded by domestic borrowing of Sh229.6 billion and external borrowing of Sh459.4 billion.
Cytonn Investments Manager Maurice Oduor said broadening the tax base, sealing the loopholes in Kenya Revenue Authority (KRA) collections through digitization of processes (i-TAX) and restructuring of the KRA processes on revenue administration will be the best way to address revenue shortfalls.
Jack is a business and society writer at the Kenya Free Press