Kenya commits 3pc reduction in budget deficit

By O’Brien Kimani

Kenya has committed to trim its budget deficit and implement a set of austerity measures to access funding from the international monetary fund. 

National Treasury Cabinet Secretary Henry Rotich says Kenya will reduce its deficit to three percent in the medium term, maintain inflation at below six percent and increase funding to priority areas.

Visiting IMF Deputy Managing Director David Lipton has told the government that, the fund is satisfied with measures being put by the government to encourage investments and economic growth.

Growing recurrent and development expenditure and thinning revenue collection has pushed Kenya’s national budget deficit to the current 8 percent of the gross domestic product.

The government has set a target of 6 percent in the short term. This has made the national treasury to embark on a borrowing spree, raising Kenya’s loan portfolio to 46 percent of the GDP.

This raised fears that the country is living beyond its reach which poses serious economic risks.

The international monetary fund has raised concern with Kenya’s widening budget deficit saying this is likely to overheat the economy.

IMF First Deputy Managing Director David Lipton says Kenya needs to reform her tax regime to mobilize more resources, reorganize its revenue management in order to direct her resources to priority areas.

“In particular, it will be important to undertake a growth-friendly reduction in fiscal deficits over the medium term to maintain debt sustainability and reduce external current account deficits,”

said the IMF First Deputy Managing Director in a statement.

National Treasury Cabinet Secretary Henry Rotich told the visiting IMF chief that Kenya will strive to cut deficit to around three percent in the medium term while at the same time reduce domestic and external borrowing.

Already the governments has frozen hiring and pay hikes in the public service.

Treasury has further shelved expenditure on new infrastructure projects until old projects are completed.

In March this year, the fund approved Kenya’s application for a 151 billion in a precautionary credit facility.


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