State to raise spending by Sh190bn in proposed budget

The National Treasury. /Enos Teche
The National Treasury. /Enos Teche

The government has projected a 7.56 per cent increase in its spending for the coming fiscal year 2019/20.

National Treasury’s Draft 2019 Budget Policy Statement shows overall expenditure set at Sh2.70 trillion from the Sh2.51 trillion in the 2018/19 year.

The expenditure include Sh1.65 trillion and Sh670.9 billion of recurrent and development expenditure respectively.

Fund allocations for the executive will increase to Sh1.76 trillion compared to Sh1.69 trillion compared to the current financial year. The judiciary will receive a 14.28 per cent increment to Sh16.93 billion while Parliament would be allocated Sh36.2 billion, 1.60 per cent decline from last year.

The projections will see an increase in allocations to the county governments to Sh310 billion. The allocations will proceed on an increase trend to Sh318.06 billion and Sh326.33 billion in 2020/21 and 2021/22 financial years respectively.

In September, the government announced amendments to the Sh3.03 trillion budget for 2018/19 year following public outcry on high taxation and spending, leading to a Sh55.1 billion cut on the budget to Sh2.97 trillion.

These amendments saw county governments funds cut from Sh314 billion to Sh304.9 billion for the current year.

In the policy statement, focus on spending will be directed to financing ongoing priorities under the Big Four Agenda and fighting corruption.

The increase in projected expenditure corresponds to a similar a projected increase in revenue collection by the treasury.

The governments expect to make a tax collection including Appropriation-in-Aid (AiA) of Sh2.08 trillion, 13.66 per cent increase from Sh1.83 trillion projected this year.

The government had slashed the revenue collection targets in October by Sh96 billion, from Sh1.94 trillion in the current year. This followed enactment of the Finance Act 2018 which resulted in a reduction in projected revenues by Sh48.6 billion.

The 2019/20 revenue performance expected has been pinned to on-going reforms in tax policy and revenue administration.

Following the projected expenditures and revenues, the government projected a fiscal deficit of Sh623.8 billion.

An overall deficit at Sh572.2 billion eased by grants in the year will reduce by 9.96 per cent against the estimated overall balance of Sh635.5 billion in 2018.

“The fiscal deficit 2019/20 will be financed by external financing of Sh306.5 billion, Sh271.4 billion domestic borrowing and other net domestic receipts of Sh5.7 billion,” the statement showed.

In a statement dated January 10, PS Kamau Thugge called stakeholders including revenue allocation and parliamentary service commissions, judicial service, county governments, controller of budget, and public views on the draft through the national treasury’s website, before its finalizing and cabinet’s approval.

“Please share your comments with the National Treasury by close of business, 25th January, 2019,” the statement read.