Economists fault Yatani’s budget deficit drop figures
Treasury Secretary Ukur Yatani holds up the briefcase containing the Budget for the 2021/22 financial year outside the National Treasury on June 11, 2021. FILE PHOTO | NMG
Treasury Secretary Ukur Yatani sees the fiscal deficit falling below Sh700 billion in two years from the Sh1.03 trillion, according to the Medium Term Debt Management Strategy 2022.
The unit which advises lawmakers on fiscal and budgetary issues, however, says the deficit — which bridged through borrowing — will remain elevated due to rising debt maturities.
This comes at a time the Treasury is seeking a change in Public Finance Management law to review debt ceiling from Sh9 trillion to a benchmark based on 55 percent of GDP.
Economists have poked holes in Treasury’s projection that budget deficit will drop by more than Sh300 billion ahead of review on the debt ceiling, citing debt repayment pressures.
Treasury Secretary Ukur Yatani sees the fiscal deficit falling below Sh700 billion in two years from the Sh1.03 trillion, according to the Medium Term Debt Management Strategy 2022.
Under the strategy, the fiscal deficit is expected to contract to 6.0 percent of gross domestic product (GDP) in the financial year starting July from projected 8.0 percent in the current year ending June, and further to 3.9 percent in 2024/25 fiscal year.
This translates to a fall in the budget hole from Sh1.03 trillion this financial year ending June to Sh846.8 billion in 2022/23 fiscal year, Sh682 in 2023/24 and Sh670 billion thereafter, according to estimates by analysts at Parliamentary Budget Office (PBO).
The unit which advises lawmakers on fiscal and budgetary issues, however, says the deficit — which bridged through borrowing — will remain elevated due to rising debt maturities and money needed to help the economy recover from Covid-19 pandemic shocks and polls.
This comes at a time the Treasury is seeking a change in Public Finance Management law to review debt ceiling from Sh9 trillion to a benchmark based on 55 percent of GDP.
