Govt revenue ‘below average’, House team says

The Kenya Revenue Authority collected Sh181.2 billion in the first two months of the current financial year, which was below the expected average for the period, the Parliamentary Budget Office (PBO) said.

All revenue receipts are below average, said the team of economic and budget experts employed by Parliament to advise MPs, and raise doubts as to whether the government will meet tax revenue targets for the year.    

Domestic borrowing is also below the target because of the high interest rates while the depreciation of the shilling against the dollar weighs heavily on the government's plans for meeting the revenue target.

The high interest rates for domestic borrowing mean the government is afraid to borrow too much money from the market.

The PBO’s explanation suggested that the combination of low revenue collections, the pressure on shilling in the foreign exchange market and the inability to borrow locally could explain the cash crunch the government is facing.

Members of the committee put the situation down to the large size of the government as a result of the institutions created under the Constitution enacted five years ago.

"We can't afford the car we have bought," said Dagoretti South MP Dennis Waweru. "We also need to go back and ask, 'Do we go for a Range Rover or a Toyota?'"

Treasury Principal Secretary Kamau Thugge was set to meet the committee to explain the government’s position on the situation but had to attend another meeting.

The committee will meet him next Tuesday.