The National Treasury has revised upwards the domestic borrowing target for the current financial year by Sh50 billion, reversing the reduction made in the Supplementary Budget I 2022/23.
This is according to the latest Estimates of Revenues, Grants and Loans for the financial year 2023/24, which shows that Treasury now targets to borrow Sh475 billion from the domestic market in the current financial year, up from the Sh425.1 billion prescribed in the Supplementary Budget I tabled earlier this year.
In June 2022, the borrowing target for the current financial year as prescribed by the Jubilee government was set at Sh579.1 billion before the Supplementary Budget I 2022/23 under the Kenya Kwanza government revised it downwards by 26.6 percent to Sh425.1 billion amid a push for aggressive fiscal consolidation by the new administration.
The latest revision in the domestic borrowing target may have been necessitated by the fact that the latest data from Treasury, published through gazette notice No. 7829 on June 16, shows that actual receipts realised through domestic borrowing as at May 31 stood at Sh464.7 billion, implying that it was already tending to exceed the Supplementary Budget I target by Sh39.6 billion.
The upward revision in the domestic borrowing target comes at a time when the government has shifted its strategy on domestic borrowing from issuing long term instruments to short and medium term ones in order to meet investor appetite and realise the borrowing target for the period ending June 30.
In June, Treasury conducted a record third tap sale of the three-year bond, FXD1/2023/03, which has so far raised Sh76.7 billion against a target of Sh65 billion.
On June 15, Treasury Principal Secretary Chris Kiptoo told Nation that the oversubscription of the June 2023 infrastructure bond had enabled the government to meet its domestic borrowing target. The June 2023 infrastructure bond attracted a staggering Sh220.5 billion in bids, against a target of Sh60 billion.
"We have done well on the external front. We have been able to get the money that we have targeted through the syndicated loan, the World Bank and the IMF [International Monetary Fund]. But on the domestic front, we have struggled and it has really been a challenge. However, the last performance because we came up with an attractive infrastructure bond, we were looking for Sh60 billion but we got Sh213 billion which we took," Dr Kiptoo said.
The upward revision also comes at a time when the latest revenue mobilisation data shows that with just a month to go before the end of the financial year, tax revenue collection is Sh367.9 billion short of the target, with the Treasury expressing optimism that while the taxman may not meet its tax collection target for the current financial year, it will still perform reasonably well.
"KRA has not performed well. But overall, we are expecting a final push and recovery before the end of the year, so we may not end up with 100 percent performance, but I think it will be a final good push," Dr Kiptoo said.
President William Ruto assented to the 2022/23 Supplementary Budget II on Monday, paving the way for an additional Sh22.9 billion from the Consolidated Fund.
The original Consolidated Fund Services budget for 2022/23 was set at Sh1.57 trillion in June 2022 before being revised downwards to Sh1.55 trillion in the Supplementary I 2022/23. The allocation has now been revised upwards to Sh1.58 trillion through Supplementary Budget II 2022/23.