The following are highlights of the Kenyan government’s budget for the 2019/20 fiscal year as presented to parliament by Finance Minister Henry Rotich.
The Government’s financial year starts on July 1.
Revenue and spending targets
“In the coming financial year, we expect revenue including A-in-A (Appropriations in Aid) of Sh2.1 trillion. Expenditure and net lending are projected at Sh2.8 trillion.”
Rate cap for commercial banks
“The aim of the interest rate capping introduced in September 2016 was to reduce the cost of borrowing, increase access to credit and higher return to savings its now going to three years and the law has had the opposite effect with micro, small and medium business starved of credit and the loan book of small banks becoming smaller.”
“Conscious of the need to spur business activity, I will in this year’s finance bill be proposing repeal of section 33b of the banking act 2016, I am convinced this will unlock credit to the private sector.”
New cars industry
“With effect from 1st July 2019, all ministries departments, agencies and other public entities are required to give exclusive preference in procurement of motor vehicles and motor cycles from firms that have assembly plants in Kenya.”
Capital gains tax
“After four years of implementation, there is need to review the capital gains tax legislation in order to enhance equity and fairness as well as harmonise the rate with other jurisdictions including the East African community region where the rate ranges from 20 to 30 per cent.”
“Consequently, I propose to increase the rate of capital gains tax from five per cent to 12.5 per cent.”
Economic growth
“Our economy continues to be resilient in the midst of significant global and domestic elements. In 2018 our economy grew by 6.3 per cent, up from 4.9 in the previous year, the growth is the highest to have been recorded for the past eight years and well above the sub-Saharan Africa regional average growth of three per cent and global average of 3.6 per cent.”
“We project growth in 2019 to remain strong at around the same level in 2018.”
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Budget deficit
“In relation to GDP this deficit represents 5.6 per cent a decline from 6.8 per cent in this financial year and 7.4 per cent in the last financial year.”
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