21 June 2014

Kenya: National Treasury to Miss Revenue Targets

The government is likely to miss its tax revenue target for the year ending June 30 by a double digit rate as collections fell short by nearly a quarter as at the end of May.

The National Treasury disclosed in a gazette notice on Friday that a total of Sh708.63 billion had been collected by May 30.

This represents a shortfall of Sh212.35 billion or 23.35 per cent of the targeted Sh920.98 billion with only a month to go on the fiscal year 2013/14 ending this month.

Over the 11-month period, total actual revenues were also Sh177 billion off the mark for the full year, recording Sh1.09 trillion against the targeted Sh1.27 trillion.

Earnings from non-tax streams were also 39.42 per cent short of full-year estimates of Sh38.87 billion, amounting to Sh27.88 billion. Total borrowing and repayment was at Sh183.65, which is 22.24 per cent off the estimate of Sh236.18 billion.

Actual external loans were half the targeted Sh46.04 billion at Sh23.14 billion, while Sh5.53 billion netted from foreign grants was also short of the full-year estimate of Sh10.88 billion by 50 per cent.

Grants from international organisations were the biggest shocker at Sh4.36 billion compared to a target of Sh17.96 billion - a more than three-fold shortfall.

Over the same period, the National Treasury issued Sh1.08 trillion out of the budgeted Sh1.45 trillion, representing a disbursement rate of 74.5 per cent.

This implies that over Sh370 billion, or a quarter of the 2013/14 budget, was still held by the Exchequer a month to the end of the fiscal year.

Linet Oyugi, director of research and policy at the Commission on Revenue Allocation, said inability by the national government to fully draw money allocated was largely due to lengthy procurement procedures.

"As much as you want to spend, you are sometimes held back by the procurement processes and challenges that come with it," Oyugi said on phone.

She cited as examples the suspension of the Sh24.6 billion laptop project that had been awarded to India's Olive Telecoms in March, and the recent Sh14.9 billion National Police Service communication systems tender to Safaricom.

A total of Sh737.29 billion had been released to various State ministries and agencies out of Sh987.50 billion approved for recurrent expenditures at the national government level for the year.

A total of 186.35 billion in development budget has been issued out of the estimated Sh273.96 billion.

The 47 counties, allocated Sh193.42 billion this financial year, had drawn Sh159.91 billion, leaving Sh33.53 billion or 17.33 per cent lying at the Treasury a month to the end of the financial year.

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