Kenya’s Budget Impact Review on Economic Growth

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The theme for Kenya’s FY 2022-2023, presented by the National Treasury, was “Accelerating Economic Recovery for Improved Livelihood”. For this reason, the National Treasury presented Kenya’s FY 2022–2023 National Budget to the National Assembly on April 7, 2022, two months earlier than the usual June date.

This was to give Parliament adequate time to discuss and approve the budget before it was wound down ahead of the August 9th elections.

In preparing the budget, the Treasury assured Kenyans and the region that the government extensively consulted Kenyans. They said that the government responded to their insightful comments and suggestions, which informed the priorities in this budget. Key among the concerns were:

1. The high cost of living

2. The high level of unemployment among the youth

3. Income inequality and the public debt burden

Most Kenyans’ concerns were related to the adverse effects of the COVID-19 pandemic. As a result, the government devised and implemented appropriate economic policies and targeted programs to protect citizens and businesses from the pandemic’s adverse effects. Looking back, the economy recovered strongly in 2021 as economic activity continued to increase following the relaxation of COVID-19 restrictions and targeted government stimulus interventions. According to the projections, the economy will recover and grow by 7.6 percent in 2021 after contracting by 0.3 percent in 2020.

And the economy was projected to stabilize at 6.0 percent in 2022. The outlook will be bolstered by the ongoing implementation of the government’s strategic priorities under the “Big Four” Agenda and interventions under the third Economic Stimulus Program. From a development standpoint, the economy continues to exhibit remarkable macroeconomic performance, with inflation remaining within target ranges and short-term interest rates remaining low and stable, while lending to the private sector has been robust.

Building on the progress made, the policies outlined in this budget were designed to put the economy back on a more sustainable growth path, resulting in better livelihoods. As a result, the Treasury and the government agreed on “Accelerating Economic Recovery for Improved Livelihood” as the year’s theme.

The government then promised to implement economic policies and structural reforms to improve Kenyans’ well-being. This included coordinating and expediting the implementation of the “Big Four” Agenda and the third Economic Stimulus Program for long-term growth.

As the fiscal year ends, it is critical to outline budget gains and how they contributed to the country’s economic development.

Implementing suitable policies and making excellent investments in the manufacturing sector has created a favorable business environment for industrial growth, job creation, and improved livelihoods. Under various ministries, departments, and agencies, Ksh 10.1 billion has been set aside in FY 2022–23 to promote local industries.

Furthermore, the government launched a plan to provide Kenyans with affordable and decent housing. To facilitate the provision of affordable housing, the government has focused on raising low-cost funds from the public and private sectors for large-scale housing investment through the National Housing Development Fund and various public-private partnerships under the Affordable Housing Scheme. As a result, Ksh 27.7 billion has been budgeted for affordable housing in FY 2022–23.

On Macroeconomic Stability The nation continues to pursue prudent fiscal and monetary policies that promote strong economic growth, business and industrial recovery, and job creation.

The inflation rate remains within the policy target range of 52.5 percent, while interest rates remain relatively low and stable to support credit access. The government has also worked to promote a stable and competitive exchange rate as well as to ensure sufficient exchange reserves as a buffer against external shocks. • The CBK foreign exchange reserves are above the minimum requirement of 4.0 months of imports cover to provide an adequate buffer against short-term shocks in the future.

Kenyans are now waiting for the release of the next national budget, in which President Ruto has promised that it will aim to broaden the tax base while considering essential factors. Adding that the bill will increase this year’s budget to Sh2.8 trillion, up from the current Sh2 trillion passed in the fiscal year 2021/22.



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