Focus on the Big Four Agenda to widen budget deficit

The government’s focus on the Big Four Agenda is expected to widen the country’s budget deficit and could lead to the issuing of a second supplementary budget.

Despite revenue collection efforts having improved, analysts at Genghis Capital are not optimistic of a better performance this year on grounds of depressed revenues due to PAYE reforms and delays in implementation of KRA’s excisable goods management system dampening excise duty collection.

This notwithstanding, Genghis Capital is projecting an economic growth of between 5.25 and 5.75 percent this year driven by a rebound in agriculture, tourism as well as public and private investments.

Despite local and international agencies such as World Bank calling for caution over the ballooning debt to GDP ratio currently at about 56 percent, analysts at Genghis Capital believe that Kenya is still way off the 74 percent debt threshold set by the IMF to raise the red flag.

Though the Central Bank has predicted a narrowing of the current account deficit from 6.2 to 5.4 percent due to among others lower importation of SGR equipment, Genghis Capital believes that increased capital expenditure towards realization of the big Four agenda as well as the high fuel prices will increase the import bill, then widen the current account deficit to 7 percent.

They are rooting for the repeal of the cap on interest rates to increase credit to the private sector.

With delays witnessed in cash transfers from treasury to county governments, Genghis is calling for counties to fast rack unlocking their own revenue sources in addition to developing defined spending structures.


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