AUSTERITY

Treasury outlines budget cuts for planned Sh2.7tn budget next year

The fiscal deficit in will be financed by net external financing of Sh247.3 billion, a domestic loan of Sh318.9 billion and other net domestic receipts of Sh3.2 billion.

In Summary
  • The exchequer has projected an allocation of Sh13.6 billion to the Judiciary, down from Sh19.2 billion this year.
The Treasury Building. Senate, National Assembly feud over funds for counties.
TREASURY BUILDING: The Treasury Building. Senate, National Assembly feud over funds for counties.
Image: FILE:

Kenya is expected to cut its expenditure for the year starting July1 by at least Sh150 billion compared to the current financial year, illustrating Treasury's resolve to austerity.

The latest medium term Budget Policy Statement by the exchequer shows the country is targeting to spend Sh2.74 trillion in 2020/21 compared to Sh2.87 trillion in the current financial year despite expected slight growth in total revenue collection.

Treasury has projected Sh2.13 trillion in revenue collection in the coming financial year, with the Kenya Revenue Authority (KRA) given a target of Sh1.85 trillion . The government a revenue target of Sh2.08 trillion this year, with KRA expected to raise Sh1.7 trillion.

 

Allocations to the three arms of the government has been significantly slashed, with allocations to the executive for instance cut to Sh1.86 trillion from Sh1.94 trillion in the ongoing financial year.

The exchequer has projected an allocation of Sh13.6 billion to the Judiciary, down from Sh19.2 billion this year.

Even though BPS does not reflect actual allocation, the slashing of Judiciary budget by almost Sh6 billion is likely to ignite an uproar witnessed in October when Treasury CS Ukur Yatani proposed drastic budgetary cuts on recurrent and development spending of up to 50 per cent with regard to the Judiciary.

Yesterday, President Uhuru Kenyatta challenged Chief Justice David Maranga to think outside the box to meet financial obligations for the sector in the wake of budget cuts.

Parliament is expected to receive Sh36.2 billion compared to Sh39.4 billion allocated in the first supplementary budget for the current financial year.

Consolidated funds and allocations to counties are however projected to increase in the coming budget year, rising to Sh580.4 billion from Sh550 billion and Sh317.5 billion from Sh316.6 billion respectively.

The country's fiscal deficit for the coming financial year is also expected to drop significantly from Sh657.4 billion this year to Sh569.4 billion in the year starting July 1.

 

The fiscal deficit in will be financed by net external financing of Sh247.3 billion, a domestic loan of Sh318.9 billion and other net domestic receipts of Sh3.2 billion.

According to the BPS, education sector has been allocated the highest share at Sh507.5 billion compared to Sh494.8 billion in the current financial year followed by Energy, Infrastructure and ICT at Sh404.6 billion. The amount to the sector has569.4 billion however been slashed from Sh435.1 billion in the current year.

Other ministries whose budget for 2020/21 have been cut includes National Security from Sh159.2 billion to Sh149.3 billion, Social Protection, Culture and Recreation Sh67.4 billion compared to Sh68.6 billion this year and agriculture to Sh48.2 billion compared to Sh52.8 billion in 2029/20.

The government's focus on the Big Four Agenda of universal health, affordable housing, manufacturing and food security has however seen Treasury increase projected allocation to the health sector to Sh112.6 billion from Sh92.7 billion.

''The budget framework has focused on the “Big Four” Plan and the strategic policy initiatives of the Government to accelerate growth, employment creation and poverty reduction,'' Treasury said.