By JOINT REPORT The EastAfrican
In Summary
- The total deficit equals about 15 per cent of the region’s $40 billion budget.
- The huge deficit, coupled with weak economic growth outlooks and the historical underperformance of tax authorities in the region, has raised concerns over its ability to implement key infrastructure projects in the next financial year.
- Experts are already concerned since governments, when unable to fully cover their deficits, will normally slash capital spending so as to free up cash for recurrent expenditure and miscellaneous demands.
East African countries face a budget deficit of
$6 billion in the next financial year amid narrowing funding options due
to the region’s high debt levels, limited revenue sources and
unpredictability of key donors.
Kenya, Tanzania, Uganda and Rwanda face $3.4
billion, $2.2 billion, $311 million and $261 million respectively in
budget deficits. The total deficit equals about 15 per cent of the
region’s $40 billion budget. The four countries have budgets of $20
billion, $12 billion, $5.5 billion and $2.2 billion respectively.
The huge deficit, coupled with weak economic
growth outlooks and the historical underperformance of tax authorities
in the region, has raised concerns over its ability to implement key
infrastructure projects in the next financial year.
Kenya is pegging its hopes on improved economic
performance and efficient tax collection to finance its budget. But
there is already concern that the country may not grow as fast as was
predicted due to rising insecurity, which has affected tourism — a key
foreign exchange earner for the country.
The agricultural sector, another key driver of the
economy, is also underperforming due to the vagaries of the weather.
Tea prices have hit rock bottom — a result of oversupply in the
international market.
In the next financial year, the Kenya Revenue
Authority is expected to collect Ksh1.18 trillion ($13.56 billion) to
finance 83.6 per cent of the budget. Last year, the authority collected
Ksh800 billion ($9.2 billion) against a target of Ksh881 billion ($10.1
billion).
In Tanzania, the revenue authority collected only
82.3 per cent of the $4.17 billion it had projected to net in the first
nine months of the 2013/14 fiscal year.
Experts are already concerned since governments,
when unable to fully cover their deficits, will normally slash capital
spending so as to free up cash for recurrent expenditure and
miscellaneous demands.
“We are concerned that development expenditure is
the biggest casualty of fiscal deficits in Tanzania. This is likely to
slow down the economic growth that has been fairly strong in the recent
past,” said analysts at Stralink Africa, a financial research firm.
In Kenya, John Mbadi, a member of the
Parliamentary Budget and Appropriations Committee, said it will be
difficult for the country to fully meet its development expenditure.
“We are banking on the economy to perform better
in order for us to meet the revenue targets, but the rising insecurity
is messing up business and limiting investment opportunities,” said Mr
Mbadi.
However, Finance Cabinet Minister Henry Rotich has
stressed that the government’s borrowing plans remain anchored in the
medium-term debt management strategy, which aims at ensuring public debt
sustainability.
No comments :
Post a Comment