Kenya has presented its 3.68 trillion shilling (25.8 billion U.S. dollars) budget for the 2023/24 financial year, which aims at the country’s economic turnaround.
Cabinet Secretary for National Treasury and Economic Planning Njuguna Ndung’u, presented the budget statement on Thursday evening before the National Assembly in the Kenyan capital Nairobi.
Ndung’u said the government wants to transform the economy and mitigate climate change effects for improved livelihoods of citizens.
While projecting an economic growth of 5.5 per cent this year, up from 4.8 per cent in 2022 he said “the growth outlook over the medium term will be reinforced by the implementation of the strategic priorities under the government’s Bottom-Up Economic Transformation Agenda (BETA).
During the new fiscal year, Ndung’u said the government intends to collect 20.8 billion dollars, which comprises 17.9 per cent of the gross domestic product (GDP), and receive 302 million dollars in grants.
This will leave the country with a 5.13 billion dollar deficit, or 4.4 per cent of the GDP.
“Given the projected revenue and grants against the expenditures, the fiscal gap will be lower than 6 billion dollars, equivalent to 5.8 per cent in the financial year 2022/23.’’
“The fiscal deficit will be financed through net external financing of 937 million dollars and net domestic financing of 4.4 billion dollars.’’
In the budget, the first in President William Ruto’s administration, Ndung’u proposed an allocation of 108 million dollars to fund initiatives in the information, communication and technology (ICT) sector.
The money will be used specifically to fast-track the development of Konza Technopolis City, which is dubbed as Kenya’s Silicon Savannah.
“Digitization and automation will increase productivity and competitiveness through eliminating information asymmetry in market access,” he said.
Ndung’u proposed an allocation of 71 million dollars toward the Hustlers Fund to support micro, small and medium enterprises (MSMEs), women, and the youth, a digital microloan facility, and 2.1 million dollars to SMEs in the manufacturing sector.
“These allocations will inevitably guarantee access to affordable credit to the ‘hustlers,’ households and MSMEs, and therefore accord them opportunities to make their rightful contribution to nation-building,” he said.
Ndung’u noted that the government will continue to expand critical infrastructure such as roads, railways, seaports and airports to create an enabling environment for economic recovery and job creation.
To this end, he proposed to the National Assembly an allocation of 1.7 billion dollars to support the construction of roads and bridges as well as their rehabilitation and maintenance.
To expand railway transport, he allocated 267 million dollars; and to support the production of reliable and affordable energy, he proposed an allocation of 445 million dollars.
Out of this, 241 million dollars will cater to the national grid system, 86 million dollars for rural electrification, and 82 million dollars for the development of geothermal energy.
To improve education outcomes in the country, the budget allocated 4.4 billion dollars to the sector, money that will cater to free primary and day secondary education and the recruitment of 20,000 intern teachers.
And to promote local industries, Ndung’u proposed a 192-million-dollar allocation that would go to county agro-industrial parks, the construction of six export processing zones, and the revival of various cash crops.
For the security sector, he allocated 2.4 billion dollars to support operations of the Kenya Defense Forces, the National Police Service, the National Intelligence Service, and the Prison Services.
Climate change, water, and sanitation, and environment programmes received an allocation of 309 million dollars.
Ndung’u also announced changes in custom duty.
“In the new structure, raw material and capital goods will be imported duty-free, intermediate goods at a rate of 10 percent, while finished goods not available in the region will now be taxed at 25 percent.
“All finished goods available in the region in sufficient quantities will attract a common external tariff rate of 35 per cent.”
Ndung’u observed that Kenya’s public debt remains sustainable but with elevated risks of debt distress due to persistent global shocks that adversely affect the liquidity ratios.
The government is committed to turning around the housing challenge into an economic opportunity to create quality jobs, he said.
“This will be achieved through facilitating the delivery of 250,000 houses per annum and enabling affordable housing mortgages.
“I propose to the National Assembly to effect a budget allocation of 251 million dollars for the housing programme,” Ndung’u said. (Xinhua/NAN)
