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December 18, 2018

Painful budget cuts to reduce runaway spending

National Treasury in Nairobi on June 14,2018.
Photo/Enos Teche.
National Treasury in Nairobi on June 14,2018. Photo/Enos Teche.

The Treasury yesterday announced a Sh55.1 billion cut in government expenditure for the current financial year, in response to a public uproar over high spending and taxation.

In the new expenditure estimates, Treasury slashed the national government budget from Sh3.026 trillion to Sh2.97 trillion. The exchequer trimmed recurrent spending from Sh1.072 trillion to Sh1.06 trillion, saving Sh11.7 billion.

The country’s development budget suffered a major cut of 5.1 per cent, despite the International Monetary Fund setting the threshold at 30 per cent of the total budget. Treasury cut it from Sh677.2 billion to Sh642.8 billion, saving Sh34.3 billion. 

Allocation to county governments has also been cut by Sh9 billion from Sh314 billion to Sh304.9 billion. The consolidated budget has been maintained at Sh677.2 billion.  

The Treasury has proposed a Sh55.1 billion budget cut affecting both national and county governments in a bold move to reduce expenditure in the face of dwindling revenue.

The State Department of Infrastructure is the major loser in the proposed budget cuts.

The Infrastructure department will now operate with Sh171 billion for the 2018-19 financial year, down from the initial Sh180 billion budget.

Other big losers include the Devolution ministry (Sh6bn), vocational and technical training (Sh1.3bn), university education (Sh1.07bn), Treasury (Sh6bn), Information Communication department (Sh5.9bn) and the Energy docket (Sh2.6bn).

The Parliamentary Service Commission and the National Assembly will also lose Sh2.3 billion and Sh2.6 billion, respectively, if the MPs vote to approve Uhuru’s memorandum on reduced spending.

“We have made adjustments to the programmes and votes as a result of amendments to the Finance Bill, 2018. Some of the adjustments exceed 10 per cent. We are in this regard requesting for special approval of the expenditure adjustments,” Rotich pleaded with MPs.

Spared in the radical budget cuts are the National Intelligence Service, the Independent Electoral and Boundaries Commission, the Office of the Director of Public Prosecutions, the Judiciary and the Judicial Service Commission.

On Friday, the President announced that more resources will be allocated to the DPP, the DCI and the Judiciary in his quest to deal with runaway corruption in the public sector.

Rotich in his statement has said all internal and external borrowing will now be restricted to funding development projects only.

Treasury also directed that as much as 30 per cent of the national budget will be allocated to development expenditure. Compensation of employees — benefits and allowances — will now be restricted to 35 per cent of the national budget.

“On wages and benefits, the share remains high. Going forward the government will come up with measures of realising the 35 per cent threshold provided for in Section 26 (1) (a) of Public Finance Management Regulations, 2015,” Rotich said.

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