Kenya has postponed plans to raise funds for road building through selling bonds backed by a fuel levy, citing the need to complete ongoing works before starting new projects.

The government planned to raise 30 billion shillings ($274 million) in the fiscal year ending June, by issuing debt that would be repaid through a road maintenance tax on every liter of gasoline and diesel. The securities may still be issued in the next fiscal year, Rashid Mohamed, director-general at Kenya Roads Board, said by phone.

“We decided to focus on ongoing programs and postpone new road works,” Mohamed said. “We want these projects to continue and forestall any delays.”

Budget Deficit

Kenya is struggling to narrow its budget deficit, estimated at 8.9% this year, without disrupting President Uhuru Kenyatta’s infrastructure expansion plan that includes new investments in roads, rail links and ports. Lawmakers last week capped the fiscal gap at 7.5% of gross domestic product for the year beginning July.

Lawmakers want Treasury to raise as much as 75 billion shillings to pay money owed to road contractors as of December, according to a report by the National Assembly budget committee. The outstanding bills are projected to increase to 85 billion shillings by end-June.

Treasury Secretary Ukur Yatani didn’t immediately respond to Bloomberg’s request for comment. An earlier proposal by lawmakers to convert all pending bills into long-term instruments was termed “a weird idea” by Yatani.

Kenyan MPs in 2019 approved legislation allowing the Kenya Roads Board to use the levy, currently charged at the rate of 18 shillings per liter on fuel imports, to back infrastructure bonds. Fuel-levy collections are projected to reach 75 billion shillings by end-June, from 72 billion shillings previous year, Mohamed said.

Kenya requires 667 billion shillings to repair existing roads and clear related unpaid bills, the National Assembly’s transport committee said in a report. Budgetary allocations show 192 billion shillings is earmarked for road transport in the 2021-22 fiscal year.