Kenya’s National Treasury Draft Budget Review & Outlook Paper (BROP) for 2023 predicts a stable economic growth rate of 5.5% for the year and anticipates maintaining this growth trajectory for the coming three years. The outlook is attributed to the resilient performance of the private sector, the resurgence of the agricultural industry, and the government’s efforts to streamline the public sector.
The favorable economic projections align with the implementation of policies and reforms guided by the Bottom-Up Economic Transformation Agenda. This marks the inaugural BROP prepared under the current administration, with a public feedback window available until September 22nd, enabling citizens to contribute their insights to the National Treasury and Economic Planning Ministry.
In response to economic challenges, the government swiftly enacted measures, including subsidies on fertilizers and seeds to address food supply shortages and stabilize prices. Additionally, the introduction of the Financial Inclusion Fund, or the Hustlers Fund, in November 2022 aimed at supporting individuals and Micro, Small, and Medium Enterprises (MSMEs) at the lower economic strata, with a focus on promoting savings.
The impact of these government interventions, coupled with favorable weather conditions during the March-May planting season, translated into a 5.3% economic growth in the first quarter (Q1) of 2023. This growth primarily stemmed from the significant recovery of agricultural activities, surging from a 1.7% contraction in the same quarter of 2022 to an impressive 5.8%.
As a result, the fiscal deficit for the FY 2022/23, including grants, was revised downward from the previous administration’s planned 6.2% to a revised target of 5.8% of GDP through the Supplementary II Budget. The government effectively met most of its financial obligations, including debt repayments and fund disbursements to Government Ministries, Departments, Agencies (MDAs), and other Semi-Autonomous Governments.
Read Also: Kenya’s Economy Records Slower Growth in Q1 2023
This is the first time in seven years that the government disbursed 100% of the Equitable Share to the 47 County Governments, totaling Ksh399.6 billion by June 30th, 2023, which included Ksh370.0 billion of equitable share and Ksh29.6 billion in inherited arrears from the previous administration.
Furthermore, the government sped up the release of the entire allocation for the National Government Constituency Development Fund (NGCDF), amounting to Ksh47.2 billion by June 30th, 2023, to facilitate development initiatives at the Constituency level, with a particular focus on education, healthcare, and infrastructure.
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The National Treasury and Economic Planning Cabinet Secretary, Prof Njuguna Ndung’u, emphasized the earnest commencement of the 2023/24 budget implementation. He urged all spending units to prioritize key programs outlined in the BETA, including Agricultural Transformation and Inclusive Growth, MSME development, housing, healthcare, and the digital superhighway and creative industry as they prepare for the 2024/25 budget.
