Kenya’s budget deficit is forecast to fall in the 2019-20 fiscal year, while overall spending will rise, the Finance Ministry said on Friday.
In a draft budget policy statement, the ministry said the budget deficit would drop to five per cent of gross domestic product in the period from July to June, from a revised deficit of 6.3 pct of GDP in the 2018-19 fiscal year.
The deficit was forecast to fall further to three per cent of GDP in 2022-23.
The policy statement said overall spending would rise to 2.70 trillion shillings ($26.56 billion) in 2019-20 from a revised 2.51 trillion shillings in the previous fiscal year.
To cover the deficit, the government will borrow Sh271.4 billion from the domestic market in 2019-20 and 306.5 billion shillings from foreign sources, the ministry said.
The East African nation’s government increased borrowing and spending recently, leaving it with a fiscal deficit that peaked at 6.8 percent in the fiscal year ending in June 2018.
In October, the International Monetary Fund said Kenya’s risk of defaulting on debt repayments had increased to moderate from low, citing the government’s public investment drive and revenue shortfalls in recent years.
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