AUSTERITY

Treasury to raid development spend in Sh18.8 billion budget cut

The cut on development budget is against persistent warnings from both local and international economic experts

In Summary
  • The parliament cut sliced Ministry of Energy’s development budget by Sh2.1 billion, most of it meant for power transmission and distribution
  • The committee only chopped Sh7 million each from recurrent expenditure meant for Parliamentary Joint Services and Public Service Commission
Majority Leader Aden Duale, Treasury CS Henry Rotich, Kikuyu MP Kimani Ichungwah and Minority Leader John Mbadi at Parliament Buildings.
Majority Leader Aden Duale, Treasury CS Henry Rotich, Kikuyu MP Kimani Ichungwah and Minority Leader John Mbadi at Parliament Buildings.
Image: EZEKIEL AMING'A

The government has Effected massive cuts on development expenditure in the second supplementary budget published in the Kenya Gazette early last week.

The publication of the Supplementary Appropriation (No. 20) Bill, 2019 by the state printer early last week allowed the National Treasury to withdraw Sh73.1 billion from the Consolidated Fund for the service of the year ending June 30, 2020.

In allocating the amount, the Parliamentary Budget and Appropriation Committee led by Kikuyu MP Kimani Ichugwa conveniently slashed only Sh14 million from the recurrent expenditure out of Sh18.8 billion budget cut target, chopping off more from development spend.

 
 

The biggest loser in the country’s supplementary budget for the current financial year is Sh2.02 billion cut the State Department of Infrastructure whose development spends, receiving Sh5.2 billion from the Sh73.1 billion budget.

The parliament cut sliced Ministry of Energy’s development budget by Sh2.1 billion, most of it meant for power transmission and distribution.

Other Ministries that saw their development spend cut includes Water and Sanitation Sh942 million, Health Sh300 million, Education Sh65 million and ICT Sh200 million.

The Ichungwa led committee only chopped Sh7 million each from recurrent expenditure meant for Parliamentary Joint Services and Public Service Commission.

The Kenyan government has always raised the development budget in its austerity plans despite below-par allocation.

This financial year, Treasury set aside Sh670.7 billion for capital expenditure, representing 24.8 per cent of the total budget of Sh2.71 trillion. It, on the other hand, allocated Sh1.66 trillion to recurrent expenditure.

The cut on development budget is against persistent warnings from both local and international economic experts.

 
 

The 24.8 per cent allocation to capital expenditure is for instance 5.2 per cent lower compared to 30 per cent threshold set the International Monetary Fund (IMF).

The global lender has since 2016 advised Kenya to focus more of its resources to development to stir economic activities.

An officer at Treasury privy to discussions between Kenya and IMF on reinstatement of the $1.5 billion (Sh150 billion) stands by facility that was cut upon expiry in September last year told the Star that 30 per cent allocation to development is one of the Washington DC-based lender’s new demand to the country.

‘’IMF wants Kenya to sustainably cut its high wage bill that forms the bulk of its recurrent expenditure, putting pressure on development budget’’, the junior official who sorts anonymity due to sensitivity of the matter still under negotiation said.

It is no wonder that the government was recently forced to hold a conference to review its wage bill that is eating up Sh48 for every Sh100 collected in domestic revenue.

The Salaries and Remuneration Commission (SRC) now wants a policy in place to streamline management of the allowances which accounts for 40 per cent of civil servants wage bill in a set of proposals presented to President Uhuru Kenyatta late last month.