- World economists have projected that Kenya’s budget deficit will be greater than the 7.5 percent of gross domestic product (GDP) estimated in the Treasury budget for this financial year.
- They forecast that the country’s fiscal deficit will shrink to an average of 7.9 percent of GDP this fiscal year from an estimated 8.7 percent in the previous one.
- The projection is contained in the July consensus forecast report for Sub-Saharan Africa compiled by Barcelona-based FocusEconomics.
World economists have projected that Kenya’s budget deficit will be wider than the 7.5 percent of gross domestic product (GDP) estimated in the Treasury budget for this financial year, saying it is unlikely that targets will be met. economic growth and tax collection.
A consensus outlook from 11 of the world’s leading banks, consultancies and think tanks has predicted that the fiscal deficit will narrow to an average of 7.9 percent of gross domestic product (GDP) this fiscal year from 8.7 percent. percent estimated in the above.
The projection is contained in the July consensus forecast report for Sub-Saharan Africa compiled by Barcelona-based FocusEconomics.
The Treasury expects the budget deficit, which is covered by loans, to decline steadily to 3.6 percent over the next three years based on spending cuts and revenue growth.
“The government’s ambitious multi-year fiscal consolidation plan will prove difficult given a history of ineffective fiscal policy implementation,” said Jee-A van der Linde, an economist at Oxford Economics, in FocusEconomic’s outlook report on Kenya. “It will take time to bring the fiscal deficit to more sustainable levels.”
Fitch Ratings has projected the largest fiscal deficit for Kenya at 9.0 percent, followed by the Economist Intelligence Unit (8.8 percent), Goldman Sachs (8.4 percent), HSBC (8.2 percent) and JPMorgan (8.0 percent).
Moody’s Analytics has forecast the lowest budget hole at 6.8 percent of GDP, followed by Fitch Solutions (6.9 percent), Citigroup Global Markets (7.7 percent), BNP Paribas (7.8 percent). ), Oxford Economics (7.9 percent) and Euromonitor International (7.9 percent). .
Kenya’s fiscal deficit averaged 7.6 percent between June 2013 and June 2020 against a target of 4.0 percent, an analysis by the Parliamentary Budget Office (PBO) shows.
This (an average deviation of 3.6 percent over seven years) captures the inability to realistically forecast future revenues and fiscal deficits and implies that decisions in the general budget are not being driven by reality but by the need to indicate a favorable fiscal position, ”the PBO wrote in its latest budget outlook report.