A report by the National Democratic Institute on the financial report 2020/2021 has identified late disbursement of funds by the national treasury to government ministries, departments, and agencies as the main impediment by the taxman to hit its revenue collection targets.
According to Noah Wamalwa from the national democratic institute, the trend in late disbursement has negatively impacted budget implementation thus indicating a structural problem in the economy.
” The trend has been going down from the 2016/2017 fiscal report where we were at 17% but currently, in the 3rd quarter of 2020/21, we are at the 12%, a decline of 5%. Our target as a country is about 18%. This means our GDP is growing faster compared to our revenue which means the investment in our country is not in more productive areas that will unlock revenue generation thus low revenue collection” said Wamalwa.
Wamalwa added that the shortfalls in the revenue collection are also leading to increased budget deficits. In 2020/21 the deficit amounted to Ksh 900 Billion to be financed through domestic and external borrowing.
To this end, the institution is calling upon the government to develop a contingency plan to address potential economic shocks, negotiate to stretch the maturity of large debts, ensure to review and implement recommendations in Public Audits as well as deliver on the Fiscal Consolidation Strategy.
The institution further calls on the national treasury to strengthen revenue forecasting capacity to improve the predictability of public funds, deliver on the Fiscal Consolidation Strategy of at most 3% budget deficit and spearhead prudent spending, and cut of wasteful and/or non-priority expenditures.
Below is the full report on The Findings of The National Government’s Budget Implementation Analysis For Q2 & Q3 of FY 2020/21
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