Hopes and misgivings surround EAC budget day - CNBC Africa

Hopes and misgivings surround EAC budget day

East Africa

by Trust Matsilele and Elayne Wangalwa 0

The East African Community comprises of Kenya, Uganda, Tanzania, Rwanda and Burundi. PHOTO: African Liberty

Kenya is expected to table 1.8 trillion Kenyan shillings, Uganda is poised to present a 1.9 trillion Ugandan shillings budget, Tanzania with 19.4 Tanzanian shillings, and Rwanda expected to present a 1.9 trillion Rwandan francs budget.

Mustansir Gulamhussein, director at KLSA East Africa, explained that Tanzania’s budget was unimpressive, as 40 per cent of the budget was donor dependent.

The budget is expected to be tabled later today will be a seven per cent increment from last year.

“The most worrying thing is on funding the budget especially factoring that the government has borrowed 8.2 trillion shillings in the past six months,” said Gulamhussein.

(WATCH VIDEO: Kenya budget day)

Similarly, Nikhil Hira, tax partner at Deloitte East Africa, said the Kenya's budget suggested nothing on bringing down expenditure.

Kenya’s budget is way above any of the other East Africa Community member countries, representing a 13 per cent increase compared to the previous fiscal year.

Hira added that Kenya was unlikely going to get 17 per cent increase in revenue, and that if the country was not using debt to develop the economy but to pay the expanded wage bill, severe problems could arise.

Kenya currently has a 342 billion shillings deficit and debt at 62 per cent of GDP. 

Due to increased terrorists’ attacks particularly in tourist regions, analysts argue that the 21 billion shillings budget for security in Kenya was predictable.

The East African economic powerhouse will however have to intensify efforts in ensuring tax collection from its expanding informal sector. This is as 60 per cent to 70 per cent of the economy is believed to be within the informal sector.

Kenneth Minjire, fixed income analyst at Genghis Capital, believes that the budget's focus will however not stray too far from priorities such as development. 

“The budget will focus on infrastructure development, which is the theme across most Sub-Saharan Africa and especially trying to build on the whole Africa growth story. So infrastructure will be really looked at with education as well,” he said. 

(WATCH VIDEO: Kenya budget to increase infrastructure spending)

The government additonally plans to fund the budget by raising 1.18 trillion shillings through taxes and non-tax revenues, 58 billion shillings from grants, 182 billion shillings from loans and 193 billion shillings from domestic borrowing.

Comments