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China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
Photo from The Star
According to the data provided by International Monetary Fund, if Kenya does not take measures on expenditure and revenue collection, Kenya’s fiscal deficit would not change in 2018.
In the Regional Economic Outlook report released in this month, Kenya as a non-resource intensive country, an economy pushed by agricultural exports and commodity imports, will have a mark variation with other sub-Saharan economies in terms of fiscal deficit adjustment.
The government has also made an improvement to reduce its fiscal deficit to 7.2 per cent in 2017 according to estimates presented by treasury to the parliament in May.
In September, the government proposed to slash its Sh3.026 trillion budget for the current financial year by Sh55 billion, cutting down spending on some sectors.
The report also warned on further reduction on capital expenditure to deter development and compromise the medium-term growth.
According to the report, domestic revenue mobilization will be a major driver in sustaining growth for fiscal adjustment even though it has been difficult to achieve with the countries in the region remaining far short from its potential.
Due to this, the revenue gap, estimated at three to five per cent of GDP on average across countries under current medium-term fiscal plans, are not expected to be closed.
The report also stated that re-adjustment of the fiscal deficit is also threatened by the re-emergence of fuel subsidies.
