Kenya Revenue Authority (KRA) faced a significant shortfall in revenue collection, reporting a total of Sh1.27 trillion in the first half of the financial year 2023/24, ending in December 2023.

This figure fell short of the targeted amount by a staggering Sh182.4 billion, primarily attributed to a shortfall in ordinary revenues amounting to Sh186.2 billion.

Despite the shortfall, there is a notable increase of 10.7 per cent in year-on-year revenue collection when compared to the corresponding period in 2022.

New data from the National Treasury sheds light on the implications of this revenue deficit, indicating that it has adversely impacted the execution of various government programs in the current fiscal year.

The Treasury officials highlighted a significant expenditure shortfall amounting to Sh360.9 billion, attributing it to below-target disbursements towards both recurrent and development expenditures.

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"Expenditures were below target by Sh360.9 billion on account of below target disbursements towards both recurrent expenditure and development expenditures," stated Treasury.

The overall fiscal deficit, including grants, stood at Sh182.4 billion, equivalent to 1.1 per cent of GDP, against a targeted deficit of Sh363.7 billion, representing 2.3 per cent of GDP.

In the month of January alone, exchequer revenue amounted to Sh170.3 billion, showcasing growth, albeit below the anticipated target of Sh198.2 billion.

Commenting on this, the Treasury stated, "In the month of January, revenues recorded a growth of 11.3 per cent with custom taxes recording a growth of 15.8 per cent and domestic taxes 13.5 per cent."

Of the Sh360 billion treasury received from domestic and external sources for budgetary support, resources from the International Monetary Fund (IMF) accounted for Sh92 billion, while funds from the Trade Development Bank (TDB) totalled Sh59.3 billion.

Treasury also disclosed that debt repayments, totalling Sh163.5 billion, were processed during the period, with domestic debt accounting for Sh69.3 billion and external debt amounting to Sh94.2 billion.

Allocation to education programs saw basic education receiving Sh31.3 billion and higher education Sh17.7 billion, totalling Sh49 billion.

Meanwhile, county governments received disbursements amounting to Sh31.8 billion in January, as outstanding exchequer requests topped Sh294.1 billion.

Looking ahead to the fiscal year 2024/2025, which commences in July, Treasury projects total expenditure to amount to Sh4.18 trillion.

This expenditure will be financed by total revenues projected to reach Sh3.4 billion and ministerial appropriations-in-aid amounting to Sh486.9 billion.