As the Government opens the coffers for the 2017-18 budget in three months’ time, the focus of Kenyans will be how Sh2.6 trillion budget will make their lives better.
National Treasury Cabinet Secretary Henry Rotich yesterday said the budget, themed ‘Creating Jobs, Delivering a Better Life for All Kenyans’, will see the country invest in accelerating job creation especially for the youth.
However, Government faces three key threats – low budget absorption rate, high tax revenue target in a depressed economy and reduced flow of donor grants.
Budget absorption rate, which looks at how much of the budgeted amount is actually used on the targeted plans, has been low.
Going by the 2016-17 supplementary budget, for every Sh1 currently being spent on paying salaries, just 47 cents goes towards development.
The ratio gets dismal given the below 52 per cent absorption rate of development funds.
A report from Controller of Budget shows that between July 2015 and June 2016, every time Sh2.16 was released to pay salaries and wages, just Sh1 was released for development.
With debts surging, slow, non-utilisation or misuse of borrowed money would mean unnecessary interest payments.
In the 2017-18 budget, Treasury plans to borrow Sh524.6 billion to plug budget deficit, a move that will take national debt above the current Sh3.6 trillion.
The economy has also been shedding jobs.
Inflation has struck 9.1 per cent for the first time since 2012