Economy

State agency revenues plunge Sh41bn on coronavirus woes

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Treasury Cabinet Secretary Ukur Yatani. FILE PHOTO | NMG

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Summary

  • The National Treasury in the 2020 Budget Review and Outlook Paper shows that ministries and State agencies collected Sh160.2 billion from Appropriations-in-Aid (A-I-A) in the period, reflecting a fall of 20 per cent from Sh201.9 billion raised a year earlier.
  • The fall came at a time State-imposed restrictions, including the closure of learning institutions and a ban on mass gatherings, denying various agencies revenues.
  • Appropriations-in-Aid are receipts from user charges, collected by ministries or departments that are over and above the amount set by the Treasury.

Revenues raised by ministries and State agencies in the year ended June fell by Sh41.7 billion compared to the previous year, new Treasury data shows, highlighting the adverse effects of the coronavirus pandemic.

The National Treasury in the 2020 Budget Review and Outlook Paper shows that ministries and State agencies collected Sh160.2 billion from Appropriations-in-Aid (A-I-A) in the period, reflecting a fall of 20 per cent from Sh201.9 billion raised a year earlier.

The fall came at a time State-imposed restrictions, including the closure of learning institutions and a ban on mass gatherings, denying various agencies revenues.

Appropriations-in-Aid are receipts from user charges, collected by ministries or departments that are over and above the amount set by the Treasury.

The entities are in the law allowed to withhold and spend the funds.

The funds also include monies from development partners or donors directly sent to ministries and agencies — technically referred to development aid.

“The A-I-A shortfall of Sh89.2 billion is attributed to a difficult operating environment owed to the prevalence of Covid-19 pandemic especially in the fourth quarter,” Treasury Secretary Ukur Yatani says.

“Closure of learning institutions significantly affected A-I-A revenue collection, especially in the universities and other institutions of higher learning such as TVETs and Kenya Medical Training Colleges.”

Kenya closed universities, colleges and all learning institutions in March in a bid to curb the spread of the disease. The move, however, hurt anticipated collections in the last quarter of the year ended June.

The institutions started phased re-opening early this month as the State adopts a cautious easing of the restrictions.

The Treasury had set a target of Sh249.4 billion to be raised through A-I-A but measures imposed to curb the spread of the coronavirus saw ministries and agencies miss the target by Sh89.2 billion.

The fall in A-I-A collections was a major contributor to the overall drop in revenue collections for the year. Total collections stood at Sh1.733 trillion, missing the target by Sh131.2 billion as the economy took heat from the pandemic.

Ordinary collections and A-I-A are the two sources of revenues to the State to plug budgeting deficits and undertake development projects.

The Treasury projects the closure of the institutions that continued to the first two months of the year to next June to increase Kenya’s fiscal deficit to 8.9 per cent of the GDP up from 7.8 per cent in the 2019/20 financial year. This will be the highest deficit in four years.