More Spending: East African finance ministers present Mega budgets for 2020-21
- The International Monetary Fund last month approved $739 million from its Rapid Credit Facility for Kenya.
- The IMF approved $491.5 million for Uganda from its Rapid Credit Facility
- Tanzania seeks over $272 million from the IMF’s Rapid Credit Facility and $50 million from AFDB
- Finance ministers in Kenya, Uganda and Tanzania on Thursday presented their budgets for the fiscal year that starts July 1
- Even with revenue under pressure, spending will increase for all three countries.
Here are some of the measures that were announced.
The region’s largest economy has lowered tax rates for corporate and personal income, turnover tax, value-added tax and provided tax relief to low income earners and employees.
Treasury Secretary Ukur Yatani said. To recoup some of that, Yatani announced proposals to lower the level of exemptions.
“Whereas these tax incentives are well intended, they have limited the capacity of government to fund critical expenditures,” he said.
These measures will cost the government 172 billion shillings ($1.62 billion) in lost revenue,
Uganda will clamp down on tax compliance and raise some levies to collect more revenue for the economy and also to boost local industries and protect them against cheap imports.
Finance Minister Matia Kasaija
The government expects economic growth of 4.5% in 2020-21 from an estimated 3.1% in the year ending June.
Africa’s second-biggest coffee grower, agriculture makes up about a quarter of gross domestic product in the country that also produces tea and sugar.
The government has decided to raise import duties on farming products to 60% and exempt the supply of agricultural products and processed milk from value-added tax.
Finance Minister Philip Mpango
Tanzania is seeking as much as $272 million from the IMF’s Rapid Credit Facility and is in talks with bilateral creditors for debt relief, according to Finance Minister Philip Mpango.
The government, whose leader President John Magufuli has declared the country free of Covid-19, is also awaiting another $50 million from the African Development Bank.
Governments in East Africa will ask for debt relief and implement new tax measures to free up money to help their economies cope with the fallout from the coronavirus pandemic.
Finance ministers in Kenya, Uganda and Tanzania on Thursday presented their budgets for the fiscal year that starts July 1, and while these three economies will continue to expand, growth will slow due to the pandemic and global and domestic measures to curb its spread. Even with revenue under pressure, spending will increase for all three countries.
Jibran Qureishi, Standard Bank Group’s head of research for Africa opined that the success of the budget hinges on COVID19.
He however suggests that Tanzania and Uganda seek out debt relief but Kenya postpone plans for fiscal consolidation. Looking into concessional loans is more feasible for the region’s largest economy.
“Authorities are keen to address deficiencies and raise capital expenditure for projects at the same time.”