Treasury projects fiscal deficit to shrink to Sh862.5bn

NAIROBI, Kenya April 7-Kenya expects its fiscal deficit to narrow to Sh862.5billion which is 6.2 per cent of the country’s GDP in the 2022/23 fiscal year, Treasury CS Ukur Yatani said on Thursday.

Currently, the country’s fiscal deficit stands at Sh1 trillion which is 8.1 percent of GDP.

A fiscal deficit is a shortfall in a government’s income compared with its spending.

Yatani who spoke in Parliament while presenting this year’s budget said the fiscal deficit will be financed through net external financing of Sh280.7 billion equivalent to 2.0 per cent of GDP and net domestic financing of Sh581.7 billion equivalent to 4.2 percent of GDP.

“We have re-prioritized public spending towards pro-poor expenditures in health, education and supporting the vulnerable segment of the population. In addition, we are leveraging on the Public Private Partnerships to fund public projects, support the private sector and narrow the fiscal deficit,” said Yatani.

The fiscal deficit will be financed from external financing of  Sh280bn and net domestic financing of  Sh581 mn.

As part of its medium-term fiscal deficit policy, he said the government seeks to reduce fiscal deficit to sh634mn in 2025/26 fiscal year.