Kenya: Treasury, KRA Revenue Target to November Suffers Sh19bn Shortfall

Nairobi — Kenya’s revenue collection by the end of November last year recorded a shortfall of Sh19.1 billion presenting a major task for the National Treasury and the Kenya Revenue Authority (KRA) to close the gap.

According to the Latest Economic and Fiscal review by the National Treasury, total revenues by the end November 2022 amounted to Sh893.8 billion (6.4 per cent of GDP) against a target of Sh912.9 billion (6.5 per cent of GDP).

The exchequer said that the below-target performance was on account of a shortfall registered in ordinary revenue of Sh32.2 billion despite the surplus collection of Sh13.1 billion in ministerial Appropriations in Aid(A-i-A).

Despite the shortfall, revenues increased by 10.6 per cent compared to a similar period in 2021.

Speaking during the opening of the public sector hearings for the FY 2023/24 and the medium-term budget, Treasury CS Njuguna Ndung’u remained optimistic that revenue collection will improve saying that in the coming financial year, they will be keen to work for results.

“All challenges become a lesson and I believe we will get past this,” he said.

The Sh19.1billion shortfall presents a major headache for the Treasury and KRA, with President William Ruto keen to grow revenues by about half to Sh3 trillion by the next financial year.

Ruto has on several occasions said that the taxman must expand the tax base by ensuring every eligible taxpayer is brought on board to pay their due share.

Accordingly, Treasury notes that reforms under the revenue administration by KRA have been scaled up to boost the collections.

“The National Treasury, jointly with the KRA, is making improvements on tax administrative measures in order to ensure revenue collection remains on target,” it said.

The measures include the implementation of a new web-based improved VAT System and the integration of KRA system with the Betting Sector and mapping of rental properties.

On the Tax policy side, Treasury noted that the development of the National Tax Policy and the Medium-Term Revenue Strategy (MTRS) which is expected to strengthen revenue mobilization are at advanced stages.

Further on budget execution, the fiscal review shows that the government’s total expenditure to November 2022 amounted to Sh1.09 trillion against a target of Sh1.18 trillion translating to a shortfall in expenditure of Ksh 87.1 billion.

“The shortfall was largely on account of below target disbursement towards recurrent expenditure of Ksh 18.8 billion and development expenditure of Ksh 26.0 billion,” said the exchequer.

The Treasury intends to suspend expenditures in some recurrent areas such as domestic and foreign travels, communication, printing, training, hospitality, fuel, purchase of furniture, purchase of motor vehicles, refurbishments and routine maintenance in a bid to achieve fiscal consolidation.


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