SPENDING PLAN

We must live within our means – CS Yatani

Country will have to plan next financial year spending Covid-19 in mind.

In Summary

•The Big Four Agenda remains a key priority area for the next financial year budget.

•National Treasury CS Ukur Yatani is however keen to cut on wastage, put money only on realistic projects.

Treasury CS Ukur Yatani outside Parliament Buildings on June 11, 2020.
BUDGET: Treasury CS Ukur Yatani outside Parliament Buildings on June 11, 2020.
Image: /FREDERICK OMONDI

The country will have to plan its next financial year spending with effects of Covid-19 on the country's economy in mind , National Treasury CS Ukur Yatani has said.

This, as the preparation process of the financial year 2021/22 and the Medium-Term Budget takes shape after its launch by the CS on Friday.

The CS has signaled major cuts on spending even as the “Big Four Agenda” remains a priority, in what will be the last financial year of the Jubilee government which is keen to write a legacy for President Uhuru Kenyatta by the time he leaves office.

 

CS Yatani has said the emergence of the Coronavirus as a global pandemic has presented unprecedented challenges to all countries including Kenya, calling on ministries,departments, agencies' sector working groups to focus on key priority areas of the economy and cut wastage.

“As we implement the current budget and move forward in preparing the next budget, we have to contend with the reality of trying to meet the funding requirement for our development objectives against the prevailing unfavourable macroeconomic conditions,” Yatani said.

 

“This means that we have to live within our means and calls for a critical review of our existing programmes and policies to ensure that they are not only consistent with our development agenda but also informed by emerging realities brought about by emergence of Covid-19 pandemic and other economic shocks in the future,” he added .

In his directive, CS Yatani has called for prioritization and allocation of resources to linkage of programmes to Post-Covid-19 Economic Stimulus Programme, linkage of programmes to the ‘Big Four’ plan either as drivers or enablers, and linkage of the programme with the objectives of Third Medium-Term Plan of Vision 2030.

Programmes must however be prioritised on the impact they will have, especially on their ability to create jobs and reduce poverty.

They must also be cost effective, sustainable and responsive to the requirements and furtherance of the implementation of the Constitution.

“In this regard, Sector Working Groups are directed to undertake a critical scrutiny of individual MDAs budgets execution reports to guide allocations when preparing the FY 2021/22 and the Medium-Term Budgets,” Yatani said.

Sector Working Groups must ensure costing of all programmes is anchored on solid assumptions, and is accurate, and the allocation of resources takes into account the ceilings provided to avoid exaggerated or understated resource requirements.

The 2021/22 financial year and the Medium-Term Budget will only focus on completion of ongoing, and viable stalled projects.

Emphasis will be on projects nearing completion to ensure that citizens benefit from such public investments, Yatani has said, further insisting that no new projects should be started without the approval of the Cabinet.

“All ongoing multi-year projects should be allocated adequate funds in accordance with the contract signed between government and third parties within the projected ceilings before a new project which must have been approved by Cabinet as indicated earlier is allocated budgetary resources,” said Yatani.

Treasury has mapped key sectors to guide resource allocation in the next financial year.

They include agriculture , education, energy, infrastructure and ICT, environment protection , water and natural resources, general economic and commercial affairs, health and national security.

This, even as Yatani plans to cut on debt to GDP ratio, expected to reduce to .0 per cent of GDP in the long-term (2023/24) from a high of 8.0 per cent of the GDP in 2019/20.

He is optimistic the economy will rebound in 2021/22 after being affected by the Covid-19 pandemic in much of the FY2019/20 and FY2020/21, which has among others, seen revenues deep on reduced economic activities.

“We expect revenue collection in the FY 2021/22 to spring back buoyed by the improving economic environment, tax policy and revenue administration measures that we have put in place,” Yatani said.

The CS is positive on growth, to be driven by strong agricultural and manufacturing activities underpinned by favorable weather conditions, strong service sector, stable macroeconomic environment , ongoing public infrastructural investments and sustained business confidence.

Growth is expected to raise gradually to 7 per cent per annum over the medium term due to investments in strategic areas under the “Big Four” plan, Treasury says.

According to Yatani, the 2020/21-2022/23 Medium-Term Budget will continue to provide an enabling environment for the private sector to thrive by preserving macroeconomic stability, expanding infrastructure, improving security , implementing business regulatory reforms, expanding access to finance and instituting governance reforms so as to achieve the Big For Agenda.

The government also plans to heighten the war on corruption and counterfeit, enhance use of public procurement to promote Buy Kenya Build Kenya initiative and support Micro, Small and Medium Enterprises sector.