BUDGETED development projects which are yet to take off will be the biggest casualty in the Supplementary Budget to be presented to the National Assembly later this month.
Treasury CS Henry Rotich has reaffirmed cash allocated to the projects that are yet to start will be re-channelled to other pressing votes in the mini-budget which is undergoing final touches.
“This is seventh month. If the project has not started, obviously it means the money will not be absorbed and we shall move it to next (financial )year,” he said on Thursday at the Treasury Building. “What we are doing is to adjust it (budget) to fit into your actual financial needs.”
Rotich has already indicated he intends to trim this financial year’s expenditure by Sh93.83 billion, largely due to shortfalls in taxation revenues and under-performance in borrowing targets.
The Kenya Revenue Authority, the Treasury has projected, is likely to miss the initial full-year Sh1.36 trillion target by Sh52.85 billion in the period ending June. In six months to December, there was a shortfall of Sh47.6 billion due to shortfalls in Income and Valued Added Tax levies by Sh37.48 billion and Sh14.11 billion, respectively.
As a result, the Treasury has proposed in the draft Budget Policy Statement for 2016 to revise this fiscal year’s budget downwards to Sh1.907 trillion from the Sh2 trillion initially approved by the National Assembly.
“There will only be cuts in net terms but the exact numbers will be known when the (supplementary budget) document is ready,” Rotich said. “It is undergoing the final phase (of consultations) before being presented to the Parliament.”
An additional Sh69 billion has been requested by various state ministries, departments and agencies on top of what they were allocated, but the Treasury has only approved Sh39.5 billion.
“In view of revenue shortfalls and little scope in domestic borrowing, these critical expenditures will be funded solely through expenditure rationalisation and commitments from development partners,” Rotich says in the BPS.
Spend on development is set to be slashed by Sh70.57 billion to Sh647.90 billion, while recurrent is to be reduced by Sh23.26 billion to Sh989.70 billion.
Chief executive of Institute of Economic Affairs Kwame Owino said transfer of development funds through supplementary budget, largely to recurrent obligations, has been the norm for years.
The development budget has been proposed at Sh980 billion for the next financial year 2016/17 – an equivalent of 47.29 per cent of the projected Sh2.072 trillion expenditure in the draft BPS to be presented to the National Assembly by February 15.