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Kenya finance ministry sees higher 2020/21 budget deficit

Credit: REUTERS/THOMAS MUKOYA

Kenya's finance ministry has forecast the 2020/21 (July-June) budget deficit to rise to 8.9% of gross domestic product from an earlier forecast of 8.4%, as tax revenue collection is hit by slowing economic activity due to the COVID-19 pandemic.

Adds details, background

NAIROBI, Oct 19 (Reuters) - Kenya's finance ministry has forecast the 2020/21 (July-June) budget deficit to rise to 8.9% of gross domestic product from an earlier forecast of 8.4%, as tax revenue collection is hit by slowing economic activity due to the COVID-19 pandemic.

The ministry had initially put the deficit at 7.5% when Finance Minister Ukur Yatani read this year's budget in June, and the figure was revised upwards to 8.4% in mid September.

A budget policy document, seen by Reuters on Monday, forecasts economic growth of 2.6% this year, 5.3% next year and 5.9% over the medium term.

Yatani had said in mid September the economy was expected to grow by less than 2.5% this year, hurt by effects of the novel coronavirus.

The economy contracted 5.7% in the second quarter, its first quarterly contraction since the global financial crisis 12 years ago, as the COVID-19 pandemic closed businesses and kept people at home and with restrictions on travel hitting the key tourism sector especially hard.

(Reporting by George Obulutsa Editing by Peter Graff)

((george.obulutsa@thomsonreuters.com; Tel: +254 20 499 1234; Reuters Messaging: george.obulutsa.thomsonreuters.com@reuters.net))

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