- In terms of the sectoral share allocation, education is projected to receive the lion share of Sh666.5 billion, 27 per cent of the total budget.
- However, this will be a three per cent deduction from the current year.
Image: HANDOUT
National security, public administration and international relations, and health sectors will receive the largest budget increases in the coming Financial Year 2024/25.
This is according to a shadow budget report by the Institute of Public Finance which says the increments will be as a result of states' needs preferences and the overall budget increase which will grow by four per cent to Sh4.1 trillion.
IPF estimates the sectors will receive a budgetary boost of 23, 17 and 6 per cent to get Sh244.4 billion, 351.7 billion and 147.6 billion, respectively.
This from Sh199.3 billion, Sh299 billion and Sh138.8 billion, respectively allocated in the current Financial Year.
Other sectors projected to receive increased budgetary allocation include: Governance, justice and law (4% to Sh250.9 billion), energy infrastructure & ICT (2% to Sh505.7 billion), and environment protection, water and natural resources (2% to Sh127.9 billion).
Notably, budgets of education, agriculture, general economic & commercial affairs, and culture and recreation sectors will be slashed on the back of the fiscal consolidation policy by the government.
“This is despite the government’s commitment to support SMEs, transform the agriculture sector, and resolve the funding crisis in education,” IPF says.
The firm's CEO James Muraguri, however explained that the budget cuts in the specific sectors could be as a result of limited borrowing space to finance the budget and the drawing of huge resources by a high debt servicing burden.
In terms of the sectoral share allocation, education is projected to receive the lion share of Sh666.5 billion, 27 per cent of the total budget. However, this will be a three per cent deduction from the current year.
Muraguri expressed concern over the continued revenue target misses by the taxman, as it would largely impact the allocations as it has been in the past years.
“If the economy undergoes a slowdown, there’s a concern that revenue generation might not meet expectations, potentially impacting budget implementation,” he said.
“Despite the national government’s optimistic forecast of Sh300 billion increase in ordinary revenue for the fiscal year 2023/24, there’s uncertainty regarding the achievement of this target.”
He notes that the taxman in the eight months period to February this year, had managed to collect 1.4 trillion, leaving it with evenly hard task to collect an average of Sh280 billion every month to hit its target of Sh2.5 trillion.
He is therefore convinced that the trend could extend to the coming financial year, dampening allocation prospects for positive growth if no proper resource mobilisation is done.
“At a time when the cost of borrowing has risen and highly accumulated debt shrinks the borrowing space, the government is left with domestic revenue mobilisation as the best funding option for FY 2024/25 budget. Therefore, persistent revenue shortfalls against the target will compromise service delivery due to budget under-execution,” Muraguri said.
Other looming challenges highlighted with a likelihood of impacting next years fiscal allocations include discrepancies between sector reports and budget allocations by counties, low absorption of development budgets and unresolved pending bills.
The report stresses that there is a pressing need to prioritise the clearance of nearly Sh570 billion nationally and Sh165 billion in county pending bills.
Clearing these bills may alleviate liquidity constraints for the private sector, but it could strain government finances, especially amid the necessity for fiscal consolidation, the report adds in part.
“Overlaps, redundancies and function duplications are further potential challenges.”