The government of Kenya has announced the nation’s plans to cut its budget deficit to 5.6 per cent of GDP in its 2019/2020 (July-June) fiscal year from a revised 6.1 per cent of GDP in the 2018/2019 fiscal year.
This was highlighted by the Treasury in a draft budget summary which was sent to parliament earlier in the month.
According to the draft, the East African nation plans to borrow 324.3 billion shillings ($3.21 billion), which is equivalent to 3.0 per cent of nation’s GDP, from abroad during the fiscal year and 289.2 billion shillings, or 2.7 per cent of GDP, from the local market.
The Treasury further stated that the Kenyan government aims to drastically reduce the overall budget deficit to 3.8 per cent of GDP in the 2022/23 fiscal year.
Criticism of Kenya’s Borrowing Rate
Prior to this, the administration has been criticised for constantly increasing the nation’s borrowing since 2013 in order to fund a range of infrastructure projects like roads.
However, the economy is projected to expand by 6.1 per cent this fiscal year, from 6.3 per cent that was recorded last year, the Treasury made this favourable forecast based the country’s stable economic fundamentals and the farming sector.