The government needed to borrow more than it had planned to during the month of April 2025 as revenue expectations were not met.
This is because its operations during the month resulted in a fiscal deficit (net borrowing) of 1.808 trillion Shillings, which was higher than the projected fiscal deficit of 1.213 trillion.
This was because both tax and non-tax revenues were lower than projected, while the government also incurred higher-than-planned expenditure.
During the month, tax revenue collections amounted to 2.180 trillion Shillings against a target of 2.279 trillion, implying a shortfall of 99.42 billion.
On the other hand, total expenditure amounted to 4.237 trillion Shillings against a plan for the month of 3.783 trillion, meaning the government had to cover the gap by increasing the borrowing it had planned.
Revenues:
During April 2025, all the three major categories of tax revenue registered shortfalls to varying degrees, leading to a total shortfall of 99.42 billion Shillings.
Taxes on international trade transactions registered the biggest shortfall of 53.06 billion with collections amounting to 863.35 billion against a target of 916.42 billion Shillings.
The main cause of the underperformance in international trade taxes was the lower-than-projected fuel imports, which affected petroleum duty collections, causing them to perform at only 76.8 percent of what had been projected for the month.
On the other hand, consumption taxes (indirect domestic taxes) amounted to 629.86 billion Shillings against a target of 664.86 billion, translating into a shortfall of 35.00 billion Shillings for the month.
Under this, Value Added Tax (VAT) accounted for most of the shortfall (24.71 Billion Shillings), while excise duty also contributed 10.3 billion to the indirect domestic tax shortfall.
The report shows that some of the goods which recorded lower than projected collections included soft drinks, cooking oil, spirits/waragi and sugar, among others.
Additionally, sectors including construction, real estate, trade, and hotels and restaurants registered lower than anticipated VAT during the month.
Direct domestic taxes (income taxes) registered the least shortfall, helped by the strong performance of the corporation tax, which was above its target for the month of 51.48 billion Shillings.
However, the underperformance of Pay-as-You-Earn (PAYE) and rental income taxes, among others, more than offset the surplus in corporation tax, resulting in an overall shortfall of 11.95 billion Shillings for direct domestic taxes.
Non-tax revenue collection amounted to 186.02 billion Shillings against a target of 198.69 billion, implying a 93.6 percent performance and a shortfall of 12.67 billion.
Expenses
During the month, expenses by the government totaled 3.169 trillion Shillings, reflecting a 10.6 percent increase over the 2.867 trillion initially planned for spending.
The higher-than-planned expenses were mainly because most ministries, departments and agencies were (and still are) working towards finalizing their work plans and thus using more funds, including unspent funds from the previous quarters.
Also, the supplementary budget that was passed in Quarter Three of the financial year increased funds available for spending for all the remaining months of the financial year.
This therefore implies that actual expenditure would be higher than the initial plans for the months which were made per the original approved budget.
Consequently, all the expense subcategories were above their respective initial plans for April 2025.
Net acquisition of non-financial assets
Similarly, the Government spent a total of 1.067 trillion shillings on the acquisition of non-financial assets (like infrastructure and other projects), which was 16.5 percent higher than the 916 billion that was initially planned for the month.
This was mainly due to procurement processes for various projects having been finalized in the previous quarters, paving the way for quicker execution in the fourth quarter, starting in April 2025.
In totality, government expenditure (expenses plus net acquisition of non-financial assets) amounted to 4.237 trillion Shillings against an initial plan of 3.783 trillion.