The National Treasury has lowered Kenya’s economic growth for the second time this year on account of drought and a lengthy political period.
Treasury Cabinet Secretary Henry Rotich says Kenya’s wealth will expand by 5.1 percent from an earlier projection of 5.9 percent. The Cabinet Secretary has also warned of a serious revenue shortfall, forcing the government to realign its expenditure program.
After five years of sustained economic growth, a combative political climate, severe drought and a crippling credit crunch have all conspired to dim economic growth in 2017.
Already economic growth for quarter one of 2017 has been disappointing at 4.7 percent compared to 5.9 in the same quarter of 2016.
This has forced the National Treasury to lower economic growth for 2017 to 5.1 percent.
National Treasury Cabinet Secretary Henry Rotich says the government has been forced to embark on a fiscal re-alignment in the face of deteriorating revenue flows.
In the first quarter of this financial year, the Kenya Revenue Authority missed its target by 40 billion shillings.
Treasury is implementing a series of austerity measures in a bid to sustain government operations. The funds will be saved from all the three arms of the government and the county governments.
As part of the cost saving mechanisms, the purchase of new furniture, entertainment budget and foreign as well as domestic travels have been frozen.
Rotich has further denied reports that the government has been forced to reschedule its loan repayment with creditors due to revenue shortfall. Treasury expects the agricultural sector to rebound due to improved rainfall.