State revenue to drop by Sh70bn due to slowdown

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Analysis by Deloitte shows that revenues are expected to drop by Sh70.1 billion between April and June even as money collected between the first quota remains unknown. 

The global coronavirus pandemic, which has led to a partial lockdown causing a fall in the economy, has been the main cause of the reduction.

Last year July to December (first six months of the fiscal year), the total revenue was at Sh920.6 billion, which was less Sh138.4 billion from the target of Sh1.059 trillion. Therefore, a drop of Sh70.1 billion would mean a shortfall to Sh208.5 billion even before looking at the surplus or fall in the January-March period. 

“We project $658 million drop in revenue collections in the remaining three months to the 2019/20 fiscal year-end,” says the Deloitte report.

According to data from Deloitte, the value of imports will reduce by 3.1 percent or Sh58.06 billion. It pointed out that the imports from China were hard-hit by the pandemic and will fall by 36.6 %.

The total import was valued at Sh1.806 trillion last year, implying that a drop of Sh58.06 billion will push it at Sh1.749 trillion.

Exports are also expected to decline, although they do not bring a significant amount of taxes due to the need to boost them.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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