Budget 2017/18

Kenya Budget 2017/18 Analysis

The Kenya Budget Statement for the Fiscal Year 2017/2018 of KShs 2.627 trillion was presented to Rev. Mutava Musyimi, the Chairman of the Budget and Appropriation Committee of the National Assembly, by Mr. Henry K. Rotich, Cabinet Secretary for Finance on 30th March 2017 under the theme “Creating Jobs, Delivering a Better Life for all Kenyans’’.

This year’s budget is seen as a tough balancing act by the Cabinet Secretary in which he walks a tight rope trying to grow tax revenues while at the same time, not to introduce a new stream of taxes. It has been projected that the Kenyan economy grew by an average of 5.9% in 2016/2017, which is twice the pace of global growth of Sub Saharan Africa.

This strong growth is attributed to continued macro-economic stability, lower import bill, investment in tourism and mainly the investment in infrastructure. This has in turn seen Kenya being a preferred investment destination in Africa with many multinationals across the world pitching tent in the country and rolling out their operations e.g. Peugeot, Volkswagen, Toyota, Ashok Leyland. The foreign direct investment (FDI) has risen from about US dollar 0.514 billion in 2013,to at least US dollar 2.3 billion in 2016.

The setting up of the e-Citizen, One Stop Center and e-Opportunities are some of measures being undertaken by the government to allow for easy and seamless business operations in the country. Kenya is taking up technological advancements and creating a conducive atmosphere for investors both locally and internationally. Kenya’s ranking in the World Bank Doing Business indicators has improved from 136 to 92.

The budget also aims at keeping inflation with the targeted range of 2.5% on either side of 5.0%, of which analysts see as being an uphill task.

Yet again, the Treasury seeks to further improve revenue collections by the KRA while at the same time, improve overall revenue administration. The budget seeks to reduce the fiscal deficit, encourage investments from both the local and foreign investors and have the ripple effect of job creation. Infrastructure development also tops the list with the completion of ongoing projects while at the same time taking up new projects already earmarked.

This year’s budget will in turn require the KRA to raise an additional KShs 300 billion to plug the deficit between this year KShs 1.7 trillion and last year’s budget of KShs 1.4 trillion. This is another herculean task for the taxman seeing that it did not meet its target in the last fiscal year, and may not do so in the remainder of the period due to the slowdown in the business environment occasioned by the upcoming elections. The Government also seeks to curb unnecessary expenditure and keep Government spending low, reduce the public sector wage bill and improve the public procurement and asset disposal to ensure it keeps within budget.

The Budget looks at furthering the gains made in the previous years by aligning itself with the onerous task to achieve Kenya’s Vision 2030. The Budget then seeks to create jobs and better the lives of Kenyans by issuing tax incentives to;

Support and grow domestic production

Reduce income inequalities

Promote job creation

Improve tax administration and compliance

Enhance security and welfare 

Budget 2017/18
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