Revenue collection is likely to drop by close to half a trillion shillings due to economic slow-down caused by the Coronavirus pandemic.
Treasury Cabinet Secretary Ukur Yatani says the development expenditure will be the hardest hit by the revenue drop in the fiscal year 2019/20.
As of march this year tax and Appropriation-in-Aid revenues stood at 1.33 trillion falling short of its 2019/2020 financial year nine-month target by 211 billion shillings.
A slowdown in business activity as a result of the Covid-19-induced trade and travel restrictions is expected to add more pressure on the Kenya Revenue Authority at a time when the country is facing mounting expenditure squeeze.
The shortfall has been caused by reduced tax collection from workers and businesses.
Treasury CS Ukur Yatani says the drop is likely to be worse in the coming days.
The below-target tax collections are also expected to drop further in the coming days after the government lowered various taxes to cushion Kenyans against negative impact of the Coronavirus.
President Uhuru Kenyatta assented to the Tax Laws (Amendment) Bill 2020.
The law exempts those earning less than Sh28,000 from paying income tax while those earning above this will benefit from a PAYE tax reduction of between 30 and 25 per cent.
Speaking when he released a survey on the socio-economic impact of Covid-19 on Kenyan households, the treasury CS has said Kenya is mulling over renegotiating its loan terms with lenders.
According to the survey 21.5 percent of households in Kenya were unable to pay rent in the month of April due to job losses.
The report further says there has been a 51.7 percent increase in the cost of transport.