CONCERN

Experts fault MPs in 2021 budget–making process

They say the Parliament has ignored public input on the Budget Policy Statement

In Summary

•National Treasury published the Draft Budget Policy Statement 2021 on January 25, 2021.

•The Budget and Appropriations Committee of the National Assembly has reviewed, made recommendations, and tabled for approval, its report without calling for public input.

Treasury CS Ukur Yatani outside Parliament Buildings during the 2020/21 budget reading, on June 11, 2020/
Treasury CS Ukur Yatani outside Parliament Buildings during the 2020/21 budget reading, on June 11, 2020/
Image: FREDERICK OMONDI

Financial experts and civil society have noted gaps in the 2021/22 budget–making process, as the National Treasury awaits approval of its proposed Sh2.96 trillion spending plan.

This is mainly on 'public participation', where Parliament has been faulted for failing to fully follow the constitutional provisions on budget-making.

In compliance with Article 25 (5) of the PFM Act, the National Treasury published the Draft Budget Policy Statement 2021 on January 25, 2021.

It went ahead to give one week to the public to provide their feedback.

Upon finalization of the Budget Policy Statement (BPS), the National Treasury forwarded it to the National Assembly, which received the BPS on February 14, 2021, as is required by Section 25 (2) of the PFM Act, which states that Treasury shall submit the BPS to Parliament, by the February 15 in each year.

The Budget and Appropriations Committee of the National Assembly then reviewed, made recommendations, and tabled for approval, the Report of the Budget Appropriations Committee on BPS for 2021/22 and the Medium Term Debt Management Strategy on March 4, 2021, without calling for public input, experts say.

The National Assembly has made a wrong turn by ignoring public input on the Budget Policy Statement (BPS) 2021
Institute of Public Finance Kenya CEO James Muraguri

Article 118 of the Constitution of Kenya states that Parliament shall conduct its business in an open manner, and its sittings and those of its committees shall be open to the public, and facilitate public participation and involvement in the legislative and other business of Parliament and its committees.

Further, Section 7 (d) of the PFM Act states that The committee of the National Assembly established to deal with budgetary matters has the responsibility to monitor adherence by Parliament, the Judiciary and the national government and its entities to the principles of public finance and others set out in the Constitution.

Additionally, Article 201 of the Constitution of Kenya highlights the principles of public finance, and subsection (a) clearly states that there shall be openness and accountability, including public participation in financial matters.

“It is for these reasons that we find it surprising that the House Business Committee of the National Assembly would allow such a critical document to be introduced in the house for approval without an open and inclusive public participation process being undertaken,” said Abraham Rugo, Country Manager, International Budget Partnership (IBP) Kenya.

Coming at a time when the country is under severe financial constraints due to high public debt service, declining tax revenues, and economic activity due to Covid-19, the 2021 budget is exceptionally crucial, notes James Muraguri, CEO Institute of Public Finance Kenya.

The two institutions now want the National Assembly to halt any discussions on the Budget Policy Statement 2021 presented by the Budget and Appropriations Committee until all the legal requirements on public participation are adhered to and the public finance principles observed.

They want the Budget and Appropriations Committee to recall their report and open up the Budget Policy Statement discussion to ensure that “the voices of the public are considered and reflected in their report.”

The Parliament Budget Office should further provide the proper advisory to the committees of Parliament including subjecting its work to principles of public participation in budgetary matters as required by the PFM Act, 2012 Part II (10) (2), they say. 

The National Assembly has made a wrong turn by ignoring public input on the Budget Policy Statement (BPS) 2021,” Muraguri said.

National Treasury CS Ukur Yatani has proposed a Sh2.968 trillion spending plan in the next financial year starting July 1, as the government works out its post-Covid-19 recovery.

This is about Sh90 billion more than the current financial year's Sh2.8 trillion even as the economy continues to suffer from the impact of the Covid-19 pandemic.

In the proposed budget, treasury has adjusted upwards spending in key areas seen to be drivers and enablers of President Uhuru Kenyatta's “Big Four Agenda”.

In the budget dubbed 'Building back better days: Strategy for resilient and sustainable economic recovery', Yatani has proposed a higher recurrent expenditure of Sh1.975 trillion (15.8 per cent of GDP) from Sh1.776 trillion.

Development spending is on the other hand expected to reduce to Sh611 billion from Sh678.5 billion in the current financial year.

To finance the high spending, Kenya Revenue Authority is expected to collect Sh100 billion more which puts its next financial year's ordinary revenue target at Sh1.7 trillion.

This is despite the tax body struggling to hit its target in previous financial year's, with the current one proving to be an uphill task due to the pandemic.

The deficit will be financed by debt where the government plans to borrow slightly above Sh1 trillion with Sh572.7 billion to be sourced locally while foreign borrowing is pegged at Sh427.5 billion.

Heavy spenders include education, which has a proposed budget of Sh510 billion up from Sh505 billion, energy, infrastructure and ICT (Sh401.3 billion from Sh362.7 billion), national security (Sh170 billion from 154.3 billion) and health (Sh119.9 billion from Sh111.7 billion).

“The energy, infrastructure, and ICT sector plays a significant role as a driver and an enabler in the implementation of the Big Four Action Plan,” CS Yatani notes in the BPS.