VenturesNow

Kenya to increase borrowing as budget gap grows

Published

6 years ago

September 14, 2018

Kenya is likely to borrow another Sh600 billion this financial year after revenue shortfalls, pushing the country deeper into the debt trap.

It had earlier been forecast that borrowing would be capped at Sh558.9 billion.

Despite a pinching tax on fuel, the gap between spending and revenues has continued to increase, prompting the Treasury to revise targets for the Kenya Revenue Authority (KRA).

The budget deficit has grown to Sh600 billion, with tax revenues expected to drop to Sh1.8 trillion, down from Sh1.9 trillion projected in the 2018/19 Budget.

Finance Principal Secretary Kamau Thugge said the dismal results from the taxman made the Government to revise its expectations.

Read also: UK gives Ghana £20m grant

“We had made projections based on what we expected KRA would collect but performance was bad, especially the last three months and so we had to adjust,” Dr Thugge said.

This means that Kenya’s targeted fiscal deficit will rise to six per cent, from a targeted 5.7 per cent, which was still seen as high by the International Monetary Fund (IMF) and formed its basis to push for debt management.

Kenya’s financing deficit over the past few years has been oscillating between 8.4 per cent in 2014 to 7.4 per cent in 2015, then 8.8 per cent in 2016 and last year, it stood at 6.9 per cent. The plan was to cut it to 5.7 per cent this year and then 4.3 per cent next year.

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VenturesNow

Nigerian banks close over two million accounts

Published

4 hours ago

May 2, 2024

Akanimoh Etim

At least two million bank accounts have been closed by different commercial banks in Nigeria following the failure of their owners to update and link them to the National Identity Number (NIN) and the Biometric Verification Number (BVN).

The Central Bank of Nigeria (CBN) had, in December 2023, issued a directive to all commercial banks in the country to restrict Tier-1 accounts without proper BVN, and NIN, that are not linked by March 1st, 2024.

The move by the apex bank, was aimed at eradicating questionable accounts, particularly as some customers failed to comply with regulatory orders on the linkage of their accounts to the NIN, BVN and other requirements.

According to a statement on Wednesday by the Nigerian Interbank Settlement System (NIBSS), the decision to close the accounts was arrived at following the expiration of the CBN deadline.

The NIBSS also indicated that the number of inactive bank accounts grew month-on-month by four million or 2.0 percent to 19.7 million in March 2024 from 19.3 million in the previous month which necessitated a weeding of the process.

The NIBSS, however, indicated that the number of active bank accounts in the country grew by 6.62 million or 3.0 percent to 219.64 million from 213.02 million in February.

VenturesNow

Kenya: President Ruto assured of fresh IMF disbursement

Published

23 hours ago

May 1, 2024

Ifeoluwa Dada

This would help the economy, which is getting better after avoiding a debt problem earlier this year.

Since the government released a $1.5 billion Eurobond in February, Kenya’s shilling has recovered from record lows. This was done to calm the market’s fears of a possible default on a $2 billion bond that matures in June.

The problems with the currency, high inflation, and new taxes meant to close budget gaps have all made living costs go up, which has led to anger and some protests.

Kenya has been able to get through a liquidity problem thanks to strong loans from the IMF and the World Bank. The East African country got an extra $941 million in loans from the IMF in January. This brought its total deal with the fund to $4.43 billion, with about $2.5 billion still due.

A source quoted by Reuters claimed the IMF officials would be in Kenya on May 9 for a review that would allow a $1 billion tranche to be released.

“That process is going on very well,” he said in the interview on Monday, adding that talks between the Kenyan minister of finance and the IMF in Washington during the World Bank/IMF spring meeting earlier this month were “extensive, very successful”. The IMF has not commented on the ongoing review.

Still, Ruto kept his promise to cut spending by 12% in the next fiscal year, from 4.2 trillion shillings to 3.7 trillion shillings.

It is expected that the budget deficit will go down from 4.9% of gross domestic product (GDP) this fiscal year to 3.9% of GDP in the 2024/25 fiscal year (17 July–June).

Earlier on Monday, Ruto and other African heads of state asked rich countries to lend record amounts to a low-interest World Bank facility for developing nations. They said that these countries were facing climate and debt problems that were getting worse.

“We want a fair international financial architecture,” Ruto said.