Last Updated: 4 April 2020
In recent years, the government has continuously increased its internal revenue generation from KSh 707.4 billion ($8.4 billion) in 2011-12 to KSh 1.58 trillion ($15.5 billion) in 2018-19, representing a 123% increase over seven years. Revenue grew by 11.3% in 2018-19, compared to the previous year’s 5.1% growth. Nonetheless, the KRA has missed all its targets over this period as they were overly ambitious, being based on over-optimistic macroeconomic forecasts.
In spite of relatively robust GDP growth in recent years, revenues have underperformed targets by an annual average of 3.7% of GDP between 2011-17, which has contributed to a growing budgetary deficit. As a result, the budgetary deficit has grown from 5.7% of GDP in 2012 to 8.9% of GDP in 2017, though the government has committed to halving the budget deficit by June 2021 and is targeting a deficit of 4.7% in its 2019/20 budget. For the 2018-19 financial year, the deficit stands at Ksh 558.9 billion ($5.5 billion). The government’s ability to reduce the budget deficit in the short-term will be contingent on implementing spending cuts and improving domestic resource mobilisation, which will require broad structural reforms, alongside a favourable domestic and global economic environment.
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