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Kenya Revenue Authority head office at Times tower in Nairobi. [Photo: Courtesy]
The Government is finding it hard to balance its books after Kenya Revenue Authority (KRA) missed its half-year revenue collection target by Sh68.3 billion.

The taxman collected Sh656.9 billion against a target of Sh701.7 billion in the period between July and December 2017, according to the National Treasury’s Post-election Economic and Fiscal report, meaning it was 6.8 per cent off-target.

This represents a third of what the Government has been forced to borrow internationally.

Treasury had hoped the taxman would collect Sh1.499 trillion in the current fiscal year, which means that it will be difficult to bridge the gap for the remainder of the year.

SEE ALSO: Apex court declines to strike out Sh5.6 billion tax suit

Tell-tale signs that KRA was struggling started to manifest in the first four months of the fiscal year when the taxman missed the target by Sh40 billion.

Revised downwards

KRA blamed this on a drastic fall in customs duty after the Government allowed the importation of duty-free sugar, maize and milk to cushion consumers against a sharp rise in inflation.

Treasury Cabinet Secretary Henry Rotich then revised KRA’s target downwards to Sh1.439 trillion and now the taxman has the daunting task of raising Sh783 billion by June.

When revenues fall short, the Government relies on grants and loans, with projections to spend Sh2.3 trillion.

SEE ALSO: KRA boss Mburu’s term extended to five years

Revenues are expected to slow to Sh1.6 trillion, creating a Sh680 billion funding gaps.

"The deficit, inclusive of grants, is therefore projected at Sh620.8 billion," said Treasury in its report.

Borrowing from the domestic market is projected at Sh293.8 billion, external borrowing at Sh323.2 billion and other domestic receipts at Sh3.8 billion.

Treasury has only borrowed Sh224 billion from the international market, including the recent Eurobond.

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