NAIROBI, Oct 13 (Reuters) – Kenya expects its fiscal deficit to narrow in the 2022/23 (July-June) fiscal year, its finance minister said on Wednesday, reaffirming a forecast of 6% economic growth in 2021.
The East African nation, whose economy is still reeling from the effects of COVID-19, is bringing its budget-making timetable forward because of a general election due next August. The budget will be presented in March instead of the usual date in June.
Ukur Yatani said the fiscal deficit was expected to fall to 5.7% of gross domestic product in its 2022/23 (July-June) budget versus 7.4% in 2021/22.
“We remain committed to fiscal consolidation path so as to stabilise growth in public debt,” Yatani said at the start of public hearings on the budget.
In August, the ministry had projected a 5.6% deficit in 2022/23.
Kenya’s economy contracted 0.3% in 2020, the first such shrinkage in three decades.
It has started recovering, but the pace could be slowed by a shortage of COVID-19 vaccines and new waves of infections, driven by the highly infectious Delta variant, and drought in various parts of the country.
“Leading indicators for the economy so far point to a robust economic recovery following the reopening of the service sectors and stronger global demand,” Yatani said.
“So it is going to be a major leap from (negative) 0.3 to 6% and that is clear that all sectors of the economy will actually take on that trajectory of growth.”
A Finance Ministry budget review and outlook paper seen by Reuters on Wednesday said that, to fill the budget gap, the ministry forecast net domestic financing of 408.1 billion shillings ($3.7 billion), or 3.0% of GDP, and net external financing of 367.8 billion shillings, or 2.7% of GDP.
Overall spending and net lending will stand at 3.23 trillion shillings in 2022/23 from 3.0 trillion shillings in the fiscal year to the end of June 2022, the document said.
($1 = 110.6800 Kenyan shillings)
(Reporting by George Obulutsa, Editing by William Maclean)