Treasury to submit budget plan amid debt anxiety

The Treasury is expected to table national budget estimates this week, amid concern over the soaring public debt, which has more than tripled in the past three years.

Budgets watchers will be waiting to see how the government will finance its spending, given that last year’s Sh2.3 trillion projections, tabled by Cabinet Secretary Henry Rotich, were largely funded through concessionary loans from China and the international market.

The estimates, usually tabled in May, will be shared with MPs early to ensure the assessment is completed before the House goes for a recess in June.

The change was made to provide room for campaigns ahead of the August 8 elections.

National Assembly Clerk Michael Sialai Rotich said the estimates are expected on Tuesday but added that no indication had been given.

Nevertheless, they will certainly be tabled this week once the Cabinet approves.

In 2015 the the public debt stood at Sh1.3 trillion and it is currently well over Sh3 trillion.

There have been claims that the government is planning to float another international bond amid an appetite for high-capital infrastructure projects that will further balloon the debt.

READ: Raila: Jubilee to float Sh83bn bond

When Mr Rotich submitted the Budget Policy Statement to Parliament in December last year, parliamentary budget experts warned that if MPs adopt the business-as-usual approach and approve the policy statement as it is, public debt will continue to rise and issues routinely raised by auditors will not be tackled.

In an analysis submitted to the Senate’s Finance Committee, the Parliamentary Budget Office (PBO) pointed out missing information and said the next spending plan will not be policy-driven.


Planning and economic experts, who advise legislators as they scrutinise the budget, said the policy statement appears to have been submitted merely to fulfil the requirements of the law.

Regarding the soaring debt, the experts advised MPs to adjust the deficit to a manageable level and enable the country to align its spending with the realities of the time.

“The office has noted through review of past budget processes that at least 10 per cent of all resources are wasted through wrong procurement, exaggerated prices among other vices,” the PBO said.

It said that based on this, it should be possible to reduce the budgets for each arm of government and each sector without causing harm.

MPs have also attracted criticism for slashing allocations to counties in the shareable revenue with the government from Sh334.9 billion to Sh291 billion, defying warnings that the amount did not account for inflation, which stands at 6.5 per cent.

The Treasury had pointed out that the total ordinary revenue is Sh1.549 trillion while the shareable income is Sh1.538 trillion.

But even this is not credible as the national government has never been able to meet the target for the shareable revenue.

READ: Governors, MPs in tussle over budget

In the Budget Policy statement, the Treasury had said that the amount of money to be shared by the 47 counties will increase by 6.7 per cent, which the PBO said does not consider the current inflation rate.

“With the current inflation at about 6.5 per cent, the increment for the counties will only cover the changes in prices and thus no benefit of the increased sharable revenue will be enjoyed by the county governments,” the PBO added.

Unlike in previous Budget Policy Statements, the Treasury also failed to disclose its specific targets to be met in the 2017/18 financial year.

“For example, there are no details on measures that will be taken to strengthen revenue collection, eliminate unproductive expenditures, stabilize the Kenyan currency…which means the 2017/18 budget will not be policy-driven,” it added.

While Treasury had said that the plan to increase housing units for the police would be expanded to the Kenya Defence Forces and the Prisons Department by 2016, it did not inform MPs of progress on this target.

There was also nothing on the planned establishment of a fund to finance the development of an integrated security system.

The Treasury was also mum about the development of guidelines for the installation of surveillance cameras in all urban buildings in collaboration with county governments.

On the infrastructure front, the Treasury listed the government’s plan to have 1,138 kilometres of low-volume roads, 1,768 kilometres of new roads, 41 footbridges and the rehabilitation of 224 kilometres of other roads.

But it is yet to report on plans regarding the Mass Rapid Transport for the Nairobi Metropolitan region as well as the establishment of an independent body to audit and certify the construction and maintenance of roads.

The construction of the second phase of the standard gauge railway (Nairobi to Naivasha) has started, the PBO noted, but there is no word on the establishment of the industrial parks there that the railway is supposed to serve.

It also failed to update MPs on any progress on the 100,000-acre Galana-Kulalu irrigation project.

The Treasury has said in the Budget Policy Statement (BPS) that it plans to continue the upgrade of stadiums at Kamariny, Chuka, Karatu-Ndarugu, Marsabit and Wote butt there is no word on the five sports venues promised in the Jubilee manifesto and the BPS for the current financial year.

MPs, through their various committees, have been able to scrutinise the budget policy statements and made adjustments.

It now remains to be seen whether the Treasury will have adhered to the changes when the 2017/18 budget is presented in the National Assembly.

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