Ndindi Nyoro speaks on Kenya’s economic outlook

Kenya's economy is navigating through unprecedented challenges as the revenue gap widens following the overruling of the Finance Bill 2024. Ndindi Nyoro, Chair of the Budget and Appropriations Committee at the National Assembly and Member of Parliament for Kiharu Constituency, sheds light on the state of the economy and the strategies being put in place to stabilize it. Nyoro highlighted that despite recent social shocks, the Kenyan economy has been robust, with a GDP growth rate of 5.6% in 2023. Inflation has been moderate at 4.4%, and the Kenyan shilling has strengthened against the dollar by 20% this year. The focus now is on ensuring that the benefits of this economic progress are felt by all Kenyans, with fiscal policies aimed at creating a more equitable society. The shelving of the Finance Bill 2024 has posed challenges for the country's debt strategy and meeting recurrent expenditure budgets. Nyoro explained that Kenya's total budget of 3.88 trillion Kenyan shillings includes significant allocations for recurrent expenditure, development, and debt repayment. The deficit stands at 767 billion shillings, but efforts to reduce government spending and debt obligations have contributed to a lower deficit-to-GDP ratio of 4.4%. When discussing revenue mobilization and debt obligations, Nyoro emphasized the need for policy reforms and improved tax administration. With only 30% of Kenya's economy operating in the formal sector, expanding the tax base to include informal activities is crucial for enhancing revenue collection. Nyoro also pointed out that Kenya's revenue-to-GDP ratio of 14% is significantly lower than that of developed countries, highlighting the potential for increased revenue generation. Despite the austerity measures implemented, Nyoro acknowledged that more can be done to optimize government spending and reform state-owned enterprises. By focusing on efficiency and commercial viability, Nyoro believes that Kenya can navigate its current economic challenges more effectively. In conclusion, Nyoro emphasized the importance of continued fiscal discipline and strategic reforms to drive economic growth and ensure financial stability in Kenya. The government remains committed to addressing the current economic challenges and fostering a more inclusive and sustainable economic environment for all Kenyans.