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Kenya budget deficit to shrink to 5.6% of GDP in 2022/23, Treasury says

08/05/2021 | 06:16am EDT
The coronavirus disease (COVID-19) spread in Nairobi

NAIROBI (Reuters) -Kenya's budget deficit will narrow to 5.6% of gross domestic product in its fiscal year to June 2023, from 7.5% in its current year, the finance ministry said on Thursday.

The East African nation, whose economy is still reeling from the impact of the coronavirus, 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.

"Fiscal consolidation policy remains key in the government's pursuit to attaining debt sustainability," Ukur Yatani, the finance minister, told a ceremony to start the budget-making process.

President Uhuru Kenyatta's government, which has ramped up borrowing since 2013 to fund a range of infrastructure projects, wants to create room for more development projects by cutting debt repayments.

Economic growth is expected to slow to 5.8% next year from 6.6% in 2021, the ministry said. A finance ministry document seen by Reuters earlier had said next year's growth could be the same level as this year.

"We are hopeful that the election period will be managed to avoid erosion of investor confidence, as this could affect the route to accelerated economic growth," Yatani said.

The pandemic has ravaged key sectors like tourism and cut the government's revenue collection last year, sending economic growth down to an estimated 0.6% in calendar 2020.

Recovery has started this year, but the pace could be curbed by a shortage of COVID-19 vaccines and new waves of infections, driven by the highly infectious Delta variant.

"A lot still needs to be done to reverse the negative impact of the pandemic from disruption of business, loss of jobs and

incomes as well as stemming inequalities in the country," the minister said.

(Reporting by George ObulutsaEditing by Duncan Miriri and William Maclean)

By George Obulutsa

ę Reuters 2021
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