Blog Post

03 May
By: Ferdinand Musungu 0

THE LAUNCH OF THE SHADOW BUDGET REPORT

KEPSA participated in the launch of the shadow budget report for the FY 2021/22 organised by Oxygéne MCL in partnership with the Institute of Public Finance, Kenya (IPFK). The meeting took place virtually on 28th April 2021. The shadow budget sought to increase the engagement between the state and non-state actors and more so spread the conversation on the use of public resources.

While highlighting the state of the macro-fiscal environment in Kenya, the Vice-Chair KEPSA Public Finance Ms. Eva Wairigia noted that there was a need for balance in terms of local borrowing between the government and private sector. According to the Central Bank of Kenya, the total public debt stands at Ksh 7.4 trillion and the Budget Policy Statement projects that the fiscal deficit in Financial Year 2021/22 will be Ksh 937.6 billion. Out of this, 63% is expected to be financed through domestic borrowing.

Kenya’s debt carrying capacity has been downgraded by International Monetary Fund (IMF) from a strong performer to a moderate performer, this is according to the Head of Research, Monitoring, Evaluation & Learning at IPFK Mr. John Nyangi. This was as a result of the country breaching some of the debt sustainability thresholds. The present value of public debt to GDP for a strong performer is given at 70% of the GDP but Kenya was downgraded to a moderate performer and the threshold is 55%. Mr. Nyangi proposed several measures to solve the challenges among them the implementation of strict austerity measures, restriction from increasing additional taxes and cut down the expenditure and reduce on debt.

In conclusion, it was agreed that the shadow budget report will serve as a point of reference for the citizens and the non-state actors and as a tool to facilitate engagements with policymakers to ensure there is a sustainable budget in Kenya.

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